GBP/USD: British Pound remains weak
Yesterday’s signals were not triggered, as there was no bullish price action when the support level identified at 1.2574 was first reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered between 8 am and 5 pm 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 1.2613, 1.2709, or 1.2814.
- 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.
- Remove 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 Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2371 or 1.2285.
- 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.
- Remove 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 as the price was showing strong signs of being unable to get above the resistance level above 1.2709, I expected we would see a consolidation below that level.
This was a good call as this resistance level was never even reached, but I would have been more correct to be more bearish.
We have a more bearish technical picture now, as we can draw a symmetrical bearish price channel which is shown in the chart below.
There is no firm risk on or off sentiment in the market now, so price movements in Forex are somewhat mixed and choppy right now, without clear direction.
However, the British Pound is certainly one of the weaker major currencies, so I see the potentially good trade in this pair as most likely to be on the short side.
I would be happy to take a bearish bias and a short trade from 1.2613 as it is quite confluent, and will become more confluent, with the upper trend line of the aforementioned bearish price channel.
Weakness in the British Pound is being caused by the near certainty that the Brexit transition period will end at the end of this calendar year plus fears that the U.K. is emerging too early from its lockdown which is likely to generate a deadly second wave of coronavirus infections. The U.K. has the highest virus death toll in Europe.
Regarding the USD, the Chair of the Federal Reserve will be testifying before Congress at 3pm London time. There is nothing of high importance scheduled today concerning the GBP.