GBP/USD: Pivotal point at 1.2400
Yesterday’s signals were not triggered as there was no bearish price action when the price first hit the two resistance levels which were reached.
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 1.2400, 1.2432, 1.2450, or 1,2465.
- 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 1.2314.
- 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 as the Pound was weak and had a well-established bearish price channel, there was no reason to be looking for anything else than a short trade here. I could not have been more wrong: the price rose strongly over the day. Breaking two resistance levels. However, the price remains below crucial resistance at 1.2400 and is still within the bearish price channel, which continues to hold.
I think bears could have some success today going short from a firm bearish reversal which may set up from a rejection of the resistance level at 1.2400, as this is confluent with the upper trend line of the long-term bearish price channel shown in the chart below. I would be happy to take that trade if it comes.
A break above 1.2465 would be a big surprise and would definitely signal a considerably more bullish technical picture if it happens.
There is nothing of high importance scheduled today regarding the GBP. Concerning the USD, there will be a release of the ADP Non-Farm Employment change forecast at 1:15pm London time.