Pound up on better than expected GDP data
Yesterday’s signals were not triggered as the bearish price action took place above the resistance level identified at 1.2363.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered between 8am and 5pm London time today only.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2300 or 1.2371.
- Place 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.
- Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2252.
- Place 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.
- Remove 50% of the position as profit when the price reaches 25 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 I would be prepared to take a bearish bias if we had gotten a price action reversal at 1.2363, but if the price could get established above that level following a break, the outlook would become a little more bullish.
This was a pretty good call as although the high was a few pips above 1.2263, we did get a bearish turn in that area, with only one hourly close at a time above that price, so I was right to see this as a pivotal point.
The price continued to fall yesterday and even tested the support at 1.2252, which has held. British GDP data was released earlier which showed a contraction of only 2%, better than the 2.6% contraction which the market consensus had been expecting. This sent the price higher.
The technical picture is more bearish, with new lower resistance confluent with the round number at 1.2300.
I am prepared to take a short trade today from a bearish reversal at 1.2300, as risk-off sentiment is growing in the market and this is likely to continue pushing the price down. The support at 1.2252 may turn out to be strong, but in these market conditions I would not want to rely on it.
Concerning the GBP, there will be a release of Preliminary GDP data at 7am London time. Regarding the USD, the Chair of the Federal Reserve will be giving a minor speech at 2pm.