GBPUSD: Pound weakens as new pro-Brexit administration imminent
Yesterday’s signals produced a long trade from the bullish rejection of 1.2562. The trade is now close to break even and looks doubtful so it might be wise to exit now.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered until 5pm London time today.
Long Trade Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2562.
Put the stop loss 1 pip below the local swing low.
Adjust the stop loss to break even once the trade is 25 pips in profit.
Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2587, 1.2615, or 1.2659.
Put the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is 25 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
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 that the indications were all bearish and for lower prices, as the former support just above 1.2600 broke down. I took a bearish bias. The price moved down initially but is now basically unchanged over the past 24 hours.
This currency pair has more direction that either of the other two majors (EUR/USD and USD/JPY) and this is due to weakness in the British Pound and the fact that the Pound, unlike the Euro and Japanese Yen, is not used as a safe haven, as well as the fact that Brexit seems very likely to happen at the end of October and may be a no-deal Brexit, both of which are widely seen as reasons to devalue the Pound. The support at 1.2562 has held over the past day but looks likely to break down rather than continue to hold. That break may well not happen today due to an expected thin trading volume, but when the price can close below 1.2562 for a couple of hours consecutively, I will take a bearish bias, but I would be wary of a bullish reversal close to the big round number of 1.2500.
There is nothing of high importance due today regarding the GBP or the USD. It is a public holiday in the U.S.A.