GBP/USD Forex Signal: Bullish Breakout Failing

Riskier currencies such as the Pound have been on a good run over recent days and it is starting to look as if the U.S. Dollar is going to make a small comeback today, which should produce some kind of bearish retracement here.

GBP/USD: Picture would be much more bullish above 1.2550

Yesterday’s signals were not triggered as the bullish price action took place a few pips below the support level which was identified at 1.2488.

Today’s GBP/USD Signals

Risk 0.75% per trade.

Trades must be entered prior to 5 pm London time today only.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2613.
  • 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 1.2437 or 1.2406.
  • 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 the technical picture was bullish, but the advance was slow. Bulls really needed to clear 1.2550 to get the price moving, so I would only take a bullish bias if we had gotten two consecutive hourly closes above that level.

This was a good call insofar as I was correct the price needed to advance, as we are now seeing a bearish retracement and a failure to hold even above the big round number at 1.2500. Riskier currencies such as the Pound have been on a good run over recent days and it is starting to look as if the U.S. Dollar is going to make a small comeback today, which should produce some kind of bearish retracement here.

Today’s most likely pivotal point clearly looks like being 1.2437, so I will still take a long trade if we get a bullish bounce from that support level later. If the price can make two consecutive hourly closes below 1.2437, that would be a bearish sign.

The importance of 1.2437 is reinforced by the fact that there are no major news releases scheduled today, so technical factors are likely to be a major driver of the price after sentiment.

GBPUSD

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

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.