GBP/USD: British Pound has no real relative strength
Yesterday’s signals were not triggered, as there was no bearish price action when the resistance level identified at 1.2709 was first reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken prior to 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 1.2714.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2650, 1.2624, or 1.2575.
- 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 although I saw the resistance level at 1.2709 as quite likely to hold over the day, I would still look for long trade entries at bullish bounces from 1.2650 or 1.2624.
I was wrong about 1.2709 holding but right about basically looking to the bullish side, as the price rose to new multi-week highs above 1.2750.
The U.S. Dollar sold off almost everywhere yesterday on high volatility, producing very strong bullish movements in Gold and Silver. There was also a relatively strong move up by the EUR/USD, and a weaker movement here in GBP/USD. This reflects the fact that the British Pound, although rising here, does not have much real underlying strength.
The price has come crashing back down on high volatility, breaking below what had seemed to be new support at 1.2714. This means that the most likely scenario now will be ranging on high volatility, which is likely to make this pair hard to trade.
It may suit scalpers to look for longs if the price reaches 1.2650 and starts to make a bullish bounce.
There is nothing of high importance scheduled today concerning either the GBP or the USD.