Today’s GBP/USD Signal
Risk 0.75% per trade.
Trades may only be taken between 8am and 5pm London time today.
Short Trade Idea
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3115.
- Put the stop loss 1 pip above the recent 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.
- Put the stop loss 1 pip below the recent 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 if the price could not break below 1.2993 quite soon, it was likely to make another trip up to at least 1.3065. This was a good call as the price reached as high as 1.3080 as that level held so I was correct to look for a long trade from the 1.3000 area and also correct to be pessimistic that it would run very far.
The price has come back down and is finally threatening to break below this pivotal area of support whose lower end is defined at about 1.2975. Risk-off sentiment is getting stronger in markets as it becomes clear that new coronavirus infections are increasing exponentially in both the U.S.A. and in the E.U. which is tending to boost safe havens such as the dollar while hitting riskier European currencies such as the British Pound and the Euro.
As there are no clear support levels below 1.2975, if we get two hourly closes below this level, I am ready to take a bearish bias as there could be plenty of room for the price to fall.
There is nothing of high importance due today concerning either the GBP or the USD.