GBP/USD: Pound one of the weakest risk currencies
Yesterday’s signals were not triggered, as none of the key levels were reached yesterday.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered before 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 1.2224 or 1.2244.
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 Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2139.
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 yesterday that this pair was weakly bullish as long as the support level at 1.2227 held. I thought the greater potential would be on the downside if that level broke down, than on the long side if it held.
I was be prepared to take a bearish bias if we get two consecutive hourly closes below 1.2225 today, and we did not.
This was an OK call as the level at 1.2225 was pivotal, and we now see the price trading below it and breaking down as the USD strengthens again.
As one of the weakest major currencies is the GBP, with the strong dollar, we have a bearish situation.
The price is now trading in a minor congestion area, but as long as it remains below 1.2225, it should begin to move down again and possibly fall as low as the next key support level at 1.2139.
I will take a bearish bias today if we get a retracement to 1.2225 and a bearish reversal there, or if we get two consecutive hourly closes below 1.2185.
Regarding the USD, there will be a release of Flash Manufacturing PMI at 2:45pm London time followed by the Chair of the Federal Reserve giving a minor speech at 7:30pm. There is nothing of high importance scheduled today concerning the GBP.