GBP/USD: British Pound slightly stronger than Euro
Yesterday’s signals were not triggered, as none of the key levels were reached yet.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken between 8 am and 5 pm London time today.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2977 or 1.3086.
- 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 1.2900, 1.2848, or 1.2804.
- 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 the support at 1.2848 surviving being tested was a bullish sign, so I was prepared to take a bullish bias here today if we got an hourly close above the recent swing high at 1.2904.
This was an OK and slightly profitable call, as at the time of writing, the price is about 12 pips higher than that entry price given after the first hourly close yesterday above 1.2900.
The resurgence in the USD that we saw appears to be a natural and relatively small retracement within the longer-term bullish trend, which survives, with the British Pound arguably slightly technically stronger than the Euro.
The price looks set to advance, but we have the very major FOMC statement and interest rate release due late in today’s New York session which could produce unpredictable price movement, especially in this currency pair.
I think if you want to trade this pair today you should scalp bullish breakouts in the long direction. Swing and position traders might do better to wait until after the FOMC, although the odds are still in favor of stronger bullish than bearish price movement.
Regarding the USD, there will be a release of Pending Homes Sales data at 3pm London time, followed by the FOMC Statement and Federal Funds Rate at 7pm then the usual press conference half an hour later. There is nothing of high importance due concerning the GBP.