GBP/USD: British Pound weaker than Euro
Yesterday’s signals produced a losing trade from the bearish reversal at 1.2547.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered before 5pm London time today.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2709.
- 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.
- Take off 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2574.
- 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.
- Take off 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 the picture was generally bearish for risk currencies and especially for this currency pair. I noted however there was no long-term trend here, but I preferred short trades and wanted to enter a short following a bearish reversal at any resistance level.
This was a reasonable call, but it did not work out well, producing a losing trade after the price made a bearish rejection at the resistance level identified at 1.2547. The price went on to advance quite strongly.
We have seen risk sentiment return to the market, which should tend to push the price of this pair up. However, the British Pound is suffering from relative weakness compared to other risky currencies. Technically, instead of breaking above recent highs, the price is showing strong signs of being unable to get above the resistance level above 1.2709.
We are likely to see a consolidation over the course of today below the resistance at 1.2709.
I am therefore prepared to take a bearish bias if the price reverses there later today but will be conservative about taking profits. This is a trade that might suit scalpers well.
Concerning the GBP, there will be a release of Claimant Count Change data at 7am London time. Regarding the USD, there will be a release of Retail Sales Data at 1:30pm, followed by testimony from the Chair of the Federal Reserve before Congress at 3pm.