GBP/USD Forex Signal - 1 August 2019

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GBPUSD: Very bearish, another new 2-year low

Yesterday’s signals were not triggered, as there was no bearish price action at 1.2212.

Today’s GBP/USD Signals

Risk 0.75% per trade.

Trades may only be entered before 5pm London time today.

Long Trade Ideas

  • Long entry following a bullish price action reversal upon the next touch of 1.2104 or 1.2000.

  • 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 Idea

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2280.

  • 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.

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GBP/USD Analysis

I wrote yesterday that the picture remained generally bearish and the new long-term low price made yesterday was a very bearish sign. However, I again wanted to see the price below 1.2100 at 9am or 10am London time before taking a bearish bias. Alternatively, a retracement to 1.2212 and a bearish reversal there would also make me take a bearish bias.

This was enough to keep out of trouble as the price retraced all the way back to 1.2225, before falling strongly again. Yesterday’s FOMC guidance has strengthened the Dollar almost everywhere, mainly against the Euro, but the British Pound rivals the Euro now as the weakest of all the major global currencies. A few hours ago, as at the time of writing, we got another new 2-year low at 1.2100. This is a support level. There is no obvious support below that until the big round number at 1.2000. There is no reason to be bullish and every reason to be bearish, so if the price is below 1.2095 at 9am or 10am London time, I’d see that as a meaningful break down and would take a bearish bias today.GBPUSDConcerning the GBP, there will be a release of the Bank of England’s Inflation Report, Official Bank Rate, Monetary Policy Summary, and Bank Rate Votes at Noon London time, followed half an hour later by the usual press conference. Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.
Learn more from Adam in his free lessons at FX Academy.