GBP/USD Forex Signal: Bearish Price Channel Continues

Adam Lemon

The price may find support for a while at either of the support levels identified below the current price, but there are good reasons to be looking for short trades only in this currency pair.

GBP/USD: New resistance at 1.2381

Last Thursday’s signals produced an excellent, profitable short trade from a bearish reversal at the resistance level identified at 1.2450.

Today’s GBP/USD Signals

Risk 0.75% per trade.

Trades must be entered between 8 am and 5 pm London time today only.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2381 or 1.2432.
  • 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

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2285 or 1.2208.
  • 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.

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GBP/USD Analysis

I wrote last Thursday that the price was back within a new bearish descending price channel. The chart was dominated by a pivotal resistance level at 1.2450.

I was right to look to the short side and this was a great call as the price has moved down from 1.2450 since then and is now reaching new lows after reversing at a new lower resistance level at 1.2381.

There is more fear in financial markets now due to the fact that many governments which eased coronavirus restrictions to try to boost economic activity are now being forced to reverse these measures, leading to more pessimism over corporate earnings. This is causing a flow into safe havens such as the U.S. Dollar, and the British Pound has some medium-term weakness.

The price may find support for a while at either of the support levels identified below the current price, but there are good reasons to be looking for short trades only in this currency pair. I will be very happy to take a short trade from 1.2381 if there is a retracement to that level and a bearish reversal off it.

GBP/USD

There is nothing of high importance scheduled today regarding either the GBP or the USD.

About the Author
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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