GBP/USD: Key resistance at 1.2842
Yesterday’s signals were not triggered, as there was no bullish price action when the support level at 1.2842 was first reached during the London session near the close.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8am and 5pm London time today only.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2842 or 1.2977.
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.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2705 or 1.2617.
Put the stop loss 1 pip below the local swing low.
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 this pair seemed to be well supported at 1.2842. There was likely to be some resistance at about 1.3000. So, I thought the most likely scenario was big swings with those levels acting as boundaries. This wasn’t a bad call as the price did remain within this area during most of the London session, but it then made a bearish break below 1.2842 to create a more bearish technical picture.
The main story here is a recovery by the U.S. Dollar, despite (or possibly because) the U.S. stock market has ben selling off. The Pound is not especially weak, but the Dollar strength is driving this pair down.
I take a bearish bias as long as the price remains below 1.2842, to at least the support level at 1.2705. It looks as if today will be a down day, but of course there is high volatility in these current extraordinary market conditions, so it is best to stay nimble and monitor any trades closely on short time frames.
There is nothing of high importance due today regarding either the GBP or the USD.