GBP/USD Forex Signal: Consolidating Below 1.2932

Adam Lemon

If we do see a stronger move against the U.S. Dollar after the FOMC release, the Pound is unlikely to be the best currency to use to trade it.

 

GBP/USD: Strong support above 1.2750

Yesterday’s signals produced a profitable short trade from the bearish doji candlestick which rejected the resistance level identified at 1.2923.

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 1.2923, 1.2975, or 1.3023.
  • 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.
  • 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.

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GBP/USD Analysis

I wrote yesterday that the price looked quite likely to continue consolidating below 1.2900 and I was only interested in trading reversals from the extremes of the consolidation area. This was a good call as we again saw the price reject the key resistance level at 1.2923.

We are seeing USD currency pairs mostly consolidate right now ahead of the big FOMC release tonight which is certain to cause more significant price movement.

As key support and resistance levels tend to hold when the market is in this condition, I expect the consolidation below 1.2923 will probably continue until the FOMC release later. However, there is some bullish pressure building up against this resistance level so a pop above 1.2923 is quite possible here. Yet I really would not want to bet on the health of any such movement, even after the FOMC release, as the Pound is still suffering from relative weakness due to the U.K. / E.U. trade issue which is unlikely to be resolved today.

If we do see a stronger move against the U.S. Dollar after the FOMC release, the Pound is unlikely to be the best currency to use to trade it.

GBP/USD

Regarding the USD, there will be a release of Core Retail Sales data at 1:30 pm London time. The Federal Reserve will be releasing their Economic Projections, Statement, and Federal Funds Rate at 7 pm followed half an hour later by the usual press conference. There is nothing of high importance scheduled today concerning the GBP.

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.
Learn more from Adam in his free lessons at FX Academy

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