GBP/USD: British Pound is relatively weak
Last Thursday’s signals were not triggered as the price action when the support level identified at 1.2714 was first reached was not sufficiently bullish.
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
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2850.
- 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 1.2773.
- 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 last Thursday that the price was just starting to break below the highest support level at 1.2714, after failing to rise above the major psychological quarter-number at 1.2750. This suggested that we were going to see a deeper retracement now, and I was correct about that. I was looking to take a long trade from the support level identified at 1.2650 but the price only got as low as 1.2673 before reversing and making a strong, continuous bullish movement, which has carried it all the way to 1.2850.
The market is dominated by strong selling in the U.S. Dollar, and practically every currency has risen against the dollar over the past few days. However, we can see that the Pound has behaved relatively weakly, which shows you that the Pound is not a truly strong currency even though the price here has been rising.
Although the bullishness here is relatively weak and the run against the USD is probably due for a retracement, and as we have already seen a firm bearish reversal off 1.2850, I think we are likely another attempt at that level and quite possibly a break above it.
I would avoid trading this pair today, but if the USD makes a comeback it is likely to be felt quite strongly here so a contrarian short trade-off 1.2850 could be interesting. However, I think the price is likely to weakly break a little higher.
There is nothing of high importance scheduled today concerning either the GBP or the USD.