Yesterday’s signals were not triggered, as there was insufficiently bullish price action when the support level at 1.3210 was first reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken prior to 5pm 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 1.3195, 1.3228, or 1.3320.
Place 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 Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3079.
Place 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 we had a bullish outlook here for several reasons, mostly because the price was continuing to make new long-term highs, and also because the pound was outperforming the euro – these two currencies typically rise or fall together against the USD.
This was not a good call but it was still the right call to make, as the price actually peaked just below the resistance level I had identified at 1.3320 just before the London session began, and has been falling ever since.
The technical picture is now significantly more bearish, despite the valid long-term bullish trend, because we have seen the price clearly print new lower resistance levels which it seems to be respecting.
At the time of writing, the price is still respecting the nearest resistance level at 1.3195. If this holds over the first hour or so of the London session and price action turns more bearish over the short-term, there could be a nice short trade opportunity with the price moving down to 1.3100 or even lower potentially.
I would also be very interested in a long trade from a bullish bounce at 1.3079, although this is very unlikely to happen today.
If the price can instead turn bullish and get established above 1.3228, that would be a very bullish sign and day traders should look for long trades above there until 1.3320.
Concerning the USD, there will be a release of CPI (inflation) data at 1:30pm London time, followed by a minor speech from the Chair of the Federal Reserve at 4:45pm. Regarding the GBP, the Governor of the Bank of England will also be giving a minor speech at 4:45pm.