GBPUSD: Very bearish at new 27-month low price
Yesterday’s signals were not triggered, as there was no bullish price action at either 1.2495 or 1.2429.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken before 5pm London time today only.
Long Trade Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2364.
Place the stop loss 1 pip below the local swing low.
Move the stop loss to break even once the trade is 25 pips in profit.
Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2430.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 25 pips in profit.
Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
GBP/USD Analysis
I wrote yesterday I expected the price to fall further over coming weeks, so I would look for short trades either below 1.2480 or following a very strong rejection of either of the resistance levels at 1.2524 or 1.2550. This was a great call as after the price broke below 1.2480 it fell sharply and has fallen by close to another 100 pips from that level over the past 24 hours.
These are new 27-month lows and there are good reasons for a weaker Pound, so it makes sense to look for short trades.
Technically, the price has just reached a potential support level at 1.2388 but it is too early to see if this level will keep the price up. It looks likely that we will see the level below that at 1.2364 tested today, so that could be pivotal. A solid break below 1.2364 could trigger an even sharper fall, so that price is quite likely to be today’s pivotal point.
I take a bearish bias on this currency pair today, but I note that the release of U.K. inflation data shortly could push the price around in an unpredictable way.
Regarding the GBP, there will be a release of CPI (inflation) data at 9:30am London time. There is nothing of high importance due today concerning the USD.