GBP/USD: The pound remains a relatively weak currency
Yesterday’s signals may have triggered a long trade from the bullish bounce from the 1.2900 area. Such a trade would be in a little floating profit at the time of writing, but I have no optimism the Pound will rise much further, so I would exit from such a trade immediately.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8 am and 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 1.3023, 1.3079, or 1.3115.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2975, 1.2900, or 1.2848.
- 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 overall, the signs were bearish and that short trades were likely to be the best opportunities that might set up over the course of the day.
I noted that there were several support levels below the price which might stop the downwards movement, but there was really no technical indication that any of them were likely to be strong.
The price did move down considerably further but bounced just below the round number at 1.2900.
Almost every currency recovered against the U.S. Dollar yesterday. The fact that the bullish bounce here seems to be relatively weak shows that the Pound is still a relatively weak currency.
Nothing has happened to reduce anxiety over the prospect that no trade deal will be reached between the U.K. and the E.U. as the final post-Brexit terms of trade are defined. This is likely to weigh heavily on the Pound as long as this situation continues.
Technically, the price is currently caught in a narrow range between the support level at 1.2975 and the resistance level at 1.3023. Both levels look as if they may be strong, so the best approach today is likely to be waiting for a breakout beyond either level and then expecting more movement in the direction of the breakout.
If this breakout is bearish, I will have some faith in it and take a bearish bias, but I want to see two consecutive hourly closes below 1.975 first.
There is nothing of high importance due today regarding either the GBP or the USD.