GBP/USD: Pound one of the weakest risk currencies
Yesterday’s signals were not triggered as none of the identified support levels were reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8am and 5pm London time today only.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 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 Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2139.
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 thought the resistance at about 1.2250 would be the day’s pivotal point.
I took no directional bias, being equally prepared to take a long trade from a bullish bounce at 1.2139 or a bearish reversal at 1.2371.
Neither level was reached, and I was wrong about 1.2250 being pivotal, as it just became invalidated by messy price action, although I did note that it was starting to look messy.
The story today is one of weak bullishness, with the USD on retreat everywhere, especially against riskier currencies such as the British Pound. However, we can see that the Pound is plainly not as strong against the Dollar as other currencies such as the Euro and the Australian Dollar, so we have really only a weak bullishness.
This weak bullishness persists technically as long as the support level at 1.2227 holds. I therefore see 1.2225 as likely to be today’s pivotal point, but I think the greater potential would be on the downside if that level breaks down, than on the long side if it holds.
I would be prepared to take a bearish bias if we get two consecutive closes below 1.2225 today.
There is nothing of high importance due today concerning the USD. Regarding the GBP, the Governor of the Bank of England will be testifying before the British Parliament at 2:30pm London time.