GBP/USD Forex Signal: Bearish Price Channel

The price is well contained within a symmetrical bearish price channel over the medium term, which is a bearish sign.

Last Thursday’s GBP/USD signals were not triggered, as the bullish price action at the support level which was reached did not happen until after the end of the London session.

Today’s GBP/USD Signals

Risk 0.75%.

Trades may only be entered before 5pm London time today.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3667 or 1.3759.

  • Put the stop loss 1 pip above the local swing high.

  • Adjust the stop loss to break even once the trade is 20 pips in profit.

  • Take off 50% of the position as profit when the price reaches 20 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 1.3527, 1.3502, 1.3437, or 1.3411.

  • Put the stop loss 1 pip below the local swing low.

  • Adjust the stop loss to break even once the trade is 20 pips in profit.

  • Take off 50% of the position as profit when the price reaches 20 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 last Thursday that although it had become less bullish, the technical picture still suggested that a long trade from 1.3551 could work out well, but I thought it was probably wisest to stand aside and wait for either a bullish breakout beyond the resistance at 1.3667 or a bearish breakdown below 1.3527 before taking any bias on this currency pair.

This was not a bad call, as we did get a minor bullish movement which originated from the 1.3551 area that day. The price remained within the range I outlined for the remainder of last week.

We have seen the price break below the lower boundary which I had identified at 1.3527, then continue to fall to 1.3450 from where it has made a firm bullish reversal.

Despite the short-term bullishness of the price action and the long-term bullish trend, the price is well contained within a symmetrical bearish price channel over the medium term, which is a bearish sign. The upper boundary of this channel is currently confluent with the round number at 1.3600, so a bearish reversal there would be an excellent opportunity for a long trade entry.

 

There is nothing of high importance scheduled today regarding either the GBP or the USD.

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.