GBP/USD: Unpredictable price action at the lows
Yesterday’s signals were not triggered as there was insufficiently bearish price action when resistance was reached to trigger a short trade entry.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades my only be taken prior to 5pm London time today.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3080 or 1.3101.
Put the stop loss 1 pip above the local swing high.
Adjust 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 run.
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 the key test now technically will be whether the resistance levels above the big round number at 1.3000 hold if and when they are retested. Despite the bullish recovery, I would be very happy to take short trades from rejections at any nearby resistance level.
This was a good call as the area of resistance at about 1.3033 did hold yesterday but failed to produce clear price action indicating a bearish reversal there.
Interestingly, the price is looking quite bullish now at this resistant area, the key level of which I have moved up to 1.3046. This is today’s pivotal point and the bulls are testing it at the time of writing.
If the level at 1.3046 holds over the first hour of the London session and the price starts to fall from there and get below 1.3000, I would be prepared to take a bearish bias.
If the price instead can get established above 1.3050 early on, it would be likely to rise higher to at least 1.3080 over the course of today.
There is nothing of high importance due today regarding the GBP. Concerning the USD, there will be a release of the ADP Non-Farm Employment Change at 1:15pm London time and ISM Non-Manufacturing PMI data at 3pm.