GBP/USD Forex Signal: More Bullish

Adam Lemon

GBP/USD: New stairstep support at 1.3008

Yesterday’s signals produced a short trade from 1.3079 which is currently in some floating profit. It would probably be wise to exit from this trade as the medium-term trend is definitely bullish with the British Pound showing relative strength.

Today’s GBP/USD Signals

Risk 0.75% per trade.

Trades must be taken 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 1.3079, 1.3115, or 1.3180.
  • Place 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 1.3008 or 1.2973.
  • Place 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 yesterday that I thought there was a good chance that the next resistance level at 1.3079 would be reached soon. I saw the level above that at 1.3115 as likely to be very strong if hit so I saw a bearish reversal there as a potentially good short trade entry.

This was a good call as the price did reach 1.3079 yesterday, from where it made only a weak bearish reversal, which does not look likely to have produced a strong bearish reversal.

The technical picture is certainly bullish, and this currency pair is looking more bullish than the EUR/USD pair. We saw yesterday's new “stairstep” higher support printed just above the big round number at 1.3000. This is a bullish sign, along with the fact that the bearish retracement from 1.3079 seems mild.

I am happy to maintain a bullish bias between 1.3008 and 1.3115. I will be happy to enter a new long trade from a bullish bounce at 1.3008, and I will also be ready to take a short trade if 1.3115 is hit later today and produces a strong bearish reversal.

GBP/USD

There is nothing of high importance due today regarding the GBP. Concerning the USD, there will be a release of CPI (inflation) data at 1:30 pm London time.

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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