GBP/USD: Cable bid near 1.2750
Last Thursday’s signals produced a nicely profitable short trade from the bearish rejection of the resistance level I had identified at 1.3023.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered before 5 pm London time today.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2848, 1.2891, or 1.2975.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2773, 1.2650, or 1.2624.
- 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 currently caught in a narrow range between the support level at 1.2975 and the resistance level at 1.3023. I thought that the best approach was likely to be waiting for a breakout beyond either level, then expecting more movement in the direction of the breakout. I was looking for two consecutive hourly closes below 1.2975 to trigger a bearish bias.
This was a good call, as even with the recent rise, entering shortly after that second hourly close below 1.2975 would have netted about 130 pips profit at the time of writing.
The Pound fell a lot against a resurgent U.S. Dollar last week, due mostly to fears over the potential lack of a U.K. / E.U. trade deal.
However, it is now looking increasingly likely that the price has found a medium-term bottom at the support level above the major quarter-number at 1.2750.
The price is now beginning to move up from there.
I don’t like the idea of either a long or short trade in this pair today. Volatility is relatively high, so trading this currency pair on short-term time frames might be interesting to day traders. If the price can break up above 1.2900 that would be a bullish sign it would be likely to go higher still.
There is nothing of high importance due today regarding either the GBP or the USD.