GBP/USD Forex Signal: Very Bearish to 1.2650

Adam Lemon

Markets were hit by risk-off sentiment which had boosted the Dollar at the expense of the Pound, which currently seemed to be the weakest major currency. 

GBP/USD: New multi-month low price

Yesterday’s signals were not triggered, as there was no bearish price action when the resistance level at 1.2824 was first reached, and the high of the day was a couple of pips short of the level at 1.2871.

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 1.2748 or 1.2871.
  • 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 1.2650, 1.2624, or 1.2575.
  • 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.

Advertisement
Take advantage of record-breaking volatility in the British Pound

Trade GBP/USD now!

GBP/USD Analysis

I wrote yesterday that I thought the price was likely to fall further over the day and that traders had an opportunity on the short side below 1.2750 and until 1.2650 is reached.

This was a good call as the price has continued to move down below 1.2750 and a new multi-month low was established at 1.2680 just a few minutes ago, as at the time of writing.

I noted yesterday that markets had been hit by risk-off sentiment which had boosted the Dollar at the expense of the Pound, which currently seemed to be the weakest major currency. Additionally, the U.K. has a trade dispute with the E.U. and time is running out to fix this. This situation persists, although we saw the U.S. stock market recover somewhat yesterday while Dollar strength persisted. Even without a strong risk-off flow, it is clear that the U.S. Dollar is strong.

The price is trading in bearish “blue sky” at new 50-day lows.

There is every reason to be bearish, except the price is approaching a cluster of key support levels starting at 1.2650, so the price may struggle to get much lower than 1.2650 over the course of today. However, it will probably prove to be excessively brave to enter a new long trade just yet.

Therefore, the opportunity here is probably on shorter time frames day trading a move down to 1.2650.

GBP/USD

Regarding the GBP, there will be releases of French Flash Services & Manufacturing PMI at 9:30 am London time, followed 15 minutes later by the German equivalents. Concerning the USD, there will be a release of Flash Manufacturing & Services PMI at 2:45 pm, followed 15 minutes later by testimony from the Chair of the Federal Reserve before Congress.

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

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.