GBPUSD: Still Bearish on Brexit focus
Yesterday’s signals produced a long trade at 1.2920 following bullish price action there. This trade would be in a little floating profit at the time of writing and it might be a good idea to exit from this trade now as the action does not look convincingly bullish now.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2870 or 1.2822.
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
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2972.
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 there had been high volatility which meant we could still see some movement even just before the Christmas holiday, so this of all the major currency pairs is probably going to be most interesting to day traders.
I thought that short from a rejection of 1.3080 or a long at a bullish bounce at 1.2972, monitored on short time frames, would probably be the best strategy to adopt.
I was correct about the high volatility but wrong about the levels, as the price fell with some surprising strength to reach new lows.
There is much more volatility in this currency pair than in any other pair, so it should remain a good choice for day traders.
Support and resistance levels are not very effective now, it seems that paying attention to the short-term bearish momentum as long as the price continues to break to new lows is going to be the best approach here. The bearishness is caused by a renewed focus upon the terms of Brexit as the British government now has strong control over the Brexit process.
There is nothing of high importance due today regarding either the GBP or the USD.