GBP/USD: Pivotal point at 1.2870
Yesterday’s signals were not triggered, as unfortunately the price action at 1.3006 was insufficiently bearish. There was no bullish price action at 1.2942.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am and 5pm London time today.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2942.
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.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2870, 1.2822, or 1.2799.
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.
Remove 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 although we had a weakly bullish technical picture, we also had major news releases due today for both currencies which might push the price anywhere, twice – so predicting the price was not likely to be fruitful.
This was a relatively good call, but I should have been more bearish as the price did fall significantly after rejecting the resistance level which I had identified just above the big round number at 1.3000.
The USD is strong everywhere and running in a clear bullish trend. The fall here is the Pound catching up with that reality.
The technical situation is interesting as this level which the price is approaching at 1.2870 has been very clearly pivotal before and can be expected to provide some strong support. I would trade a firm bounce there as a long, but would also be prepared to take a bearish bias if the price can make two consecutive hourly closes below it during today’s London session.
Concerning the GBP, there will be a release of Retail Sales data at 9:30am London time. There is nothing of high importance due today regarding the USD.