GBP/USD: New higher support at 1.2400 round number
Last Thursday’s signals produced a short trade right at the end of the London session which was good for about 50 pips of profit after the price reversed at the 1.2388 area.
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 1.2571.
- Put 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 25 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 1.2400 or 1.2378.
- Put 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 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 last Thursday that I saw the best approach here as taking quick trades on short time frames from bounces off either support or resistance levels.
I also thought that it was very unlikely that the price would get established that day above 1.2420.
These were good call as there was a short bounce from resistance, but it did not go very far – also, the price did not get above 1.2420, in fact the high of the day was 5 pips below that level.
The picture here is now looking much more bullish, as USD weakness has persisted and the Pound is showing some strength by breaking decisively above that pivotal area of former resistance at about 1.2400. There is a bearish inflection point above at 1.2450, but the 1.2400 area may well prove to be supportive if it is reached during this current bearish retracement.
I would be happy to take a long trade if we get a bullish bounce at 1.2400 today.
There is nothing of high importance due today concerning either the GBP or the USD.