GBPUSD: More Bullish on trade deal outlook
Last Thursday’s signals were not triggered, as there was no bearish action at 1.2210 and the support at 1.2105 was never quite reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8am New York time5pm London time today only.
Long Trade Idea
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2195.
- 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
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2364 or 1.2393.
- 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 last Thursday that although the price action was very messy, the support at 1.2105 may be an interesting level. If we get a firm bullish bounce there, a long trade back up to the area of the recent highs at about 1.2175 became a possibility.
This was a good call, as the price has advanced steadily ever since it came very close to reaching 1.2105 on Thursday. The Pound is much more bullish now as there is an increasing prospect of the U.K. reaching some trade deals which would have the effect of reducing the economic disruption of Brexit which is scheduled to happen at the end of October. This is in contrast to almost all “risky” assets which are currently weak.
Technically, the price is making higher lows and higher highs, and the bullishness looks solid. I would be prepared to take a conservative long trade in this currency pair if a could entry opportunity can be found following a retracement to 1.2259.
There is nothing of high importance due today concerning the GBP– it is a public holiday in the U.K. Regarding the USD, there will be a release of Core Durable Goods Orders at 1:30pm London time.