GBPUSD: Strong resistance above 1.2932
Yesterday’s signals were not triggered, as there was insufficiently bullish price action when the support level at 1.2897 was first reached.
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 1.2888 or 1.2867.
⦁ 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 1.2932 or 1.2943.
⦁ 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 yesterday that some downwards movement here seems logical next despite the relative strength in the Pound. I saw 1.2897 as likely to be the day’s pivotal point and was ready to take a weakly bearish bias if the price had gotten established below that level. This was a good call as far as at least identifying the pivotal area correctly, as the level basically held and produced an upwards move.
The Pound still has strength as the odds remain strongly in favour of a Conservative majority in the British election which will be held three weeks from today, which would provide certainty over Brexit happening on the terms already agreed in theory between the British Government and the European Union at the end of January.
The problem for bulls is that we have an area of long-term resistance just ahead, starting at 1.2932, which is going to very difficult to break until the election result, or possibly just a few days before the election result. However, a bullish breakout above this resistant area around 1.3000 could be strong if and when it finally happens. Yet it seems likely that the price will make its high of the next two weeks or so somewhere between 1.2932 and 1.3081.
I therefore think the best opportunities are likely to be short trades at any key resistance level, and we may already have seen today’s high at 1.2932 which held cleanly. Such shorts may need to be held for a week or two to really pay off, and there could be some false starts, but there will probably be an opportunity here soon on the short side.
There is nothing of high importance due today concerning the GBP or the USD.