GBPUSD: Narrowing triangle pushing breakout scenario
Yesterday’s signals were not triggered, as the price never quite hit the support level at 1.2822.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered between 8am and 5pm London time today only.
Long Trade Ideas
⦁ Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2822, 1.2800, or 1.2767.
⦁ 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 Ideas
⦁ Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2870 or 1.2924.
⦁ 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 it looked as if bulls and bears were very likely to fight it out at what I saw as a pivotal point at 1.2870. I was correct about the technical levels, but the battle was at support near 1.2822 and not the resistance at 1.2870, so I was wrong on that point.
The price chart below shows that the descending trend line which I highlighted yesterday is making its presence felt quite strongly and is continuing to push the price down. However, we also have a short-term ascending triangle below which is creating a consolidating triangle formation.
Respecting the triangle formation, I see a breakout above 1.2870 as a bullish sign, and a breakdown below 1.2822 as a bearish sign. The breakout may well take place when the British Retail Sales data is released,
Regarding the GBP, there will be a release of Retail Sales data at 9:30am London time. Concerning the USD, there will be a release of PPI data at 1:30pm, followed by testimony by the Chair of the Federal Reserve before Congress at 3pm.