GBP/USD: Pound relatively weak
Yesterday’s signals produced a losing short trade from the hourly pin candlestick which rejected the resistance level at 1.2625.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only 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 1.2581, 1.2598, or 1.2670.
- 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 1.2520 or 1.2437.
- 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 scalpers may have some fun today looking for short pips off 1.2625. Swing traders should probably exit any longs and go flat.
This was a pretty good call although the high was somewhat above 1.2625. However, the first touch of 1.2625 during the London session did give some short pips from scalpers. I was correct in seeing the bullish move as unlikely to continue with good momentum.
The technical picture now is more bearish as the price seems to be moving down towards the key supportive area around 1.2500 again.
Overall, we see medium-term ranging conditions between 1.2500 and 1.2670, so it could be possible that the next good opportunity will again be a long trade entry from a bullish reversal at the support of 1.2520.
If you are trading this pair today, be aware that the ECB will be giving its monthly policy input, which could push the price around here too.
I am prepared to take a long trade today from a bullish bounce at 1.2520. Ideally, the move would also reject the round number at 1.2500.
(image16072020gbpusd)
https://www.tradingview.com/chart?symbol=FX%3AGBPUSD
Concerning the USD, there will be a release of Retail Sales data at 1:30pm London time. There is nothing of high importance scheduled today concerning the GBP.