GBP/USD: More bullish on USD weakness
Yesterday’s signals were not triggered, as the bearish price action took place above 1.2301.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am and 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 1.2358 or 1.2515.
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 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 best approach to trading this currency pair was likely to be waiting to see what happened if 1.2300 was reached, and to either take a short trade on a short time frame if the level is rejected, or to trade a bullish breakout above the level on bearish retracements, also on a short time frame.
This did not work out so well as the price made several hourly closes above 1.2300 without really getting firmly established above that level.
The price was mostly bullish yesterday before making a dip when news broke that the Prime Minister of the U.K. had been moved to intensive care due to persistent coronavirus symptoms. However as it became clearer that Dominic Raab would effectively become acting PM, the Pound recovered, and as the USD weakened, we saw the Pound break up above 1.2300 and even begin to threaten a new pivotal point likely to exist a little way above 1.2350.
I think everything will now hinge on whether the USD remains weak and how the price reacts if and when it reached 1.2358. The technical picture would become considerably more bullish if the price can break up above that level.
There is nothing of high importance scheduled for today concerning either the GBP or the USD.