GBPUSD: Very bullish but volatile on Brexit deal rumours
Yesterday’s signals were not triggered, as there was no bearish price action at 1.2729.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered 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 1.2729.
- Put 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 Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2828, 1.2924, or 1.2970.
- Put 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 that as a Brexit deal gets closer to being agreed or is agreed the price should rise. News broker yesterday that a deal was getting closer and this sent the price up strongly again to new multi-week highs. Another bullish sign is that the former resistance level at 1.2729 is clearly acting as new higher support, which can be seen in the price chart below.
There is a strong chance that a Brexit deal will be agreed between the U.K. government and the E.U. tomorrow, and that it will have the votes to just scrape through the British Parliament, paving the way for Brexit to happen on 31st October. If it does happen, we can expect the price to rise sharply to at least 1.3000. However, if something goes “wrong”, the price would probably fall very sharply, so volatility in some direction is a very likely outcome.
I think a Brexit deal will be agreed, so I expect to see the price rise over the coming days. For this reason, I would take a bullish bias if we get a strong bullish bounce after a retracement to the new support level at 1.2729. Higher than expected inflation data will also be likely to push the price up.
Regarding the GBP, there will be a release of CPI (inflation) data at 9:30am London time. Concerning the USD, there will be a release of Retail Sales data at 1:30pm.