Last Wednesday’s GBP/USD signals might have produced a profitable long trade from 1.3858 and a losing short trade from 1.3920.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered prior to 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 1.3938 or 1.4021.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 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 1.3855 or 1.3759.
Place the stop loss 1 pip below the local swing low.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 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 last Wednesday that we had a mixed technical environment with both bullish and bearish pressures. I thought that the main thing to watch out for was likely to be a bullish breakout beyond 1.3920. If we had gotten two consecutive closes above that level, I thought that we were likely to see a more sustained rise towards 1.4000.
I was right about 1.3920 as this level held as resistance until late in the New York session, but when it finally broke to the upside, the price gained approximately another 80 pips in just a few hours.
The technical picture remains mixed, with both bulls and bears having some success in exerting pressure on the price, which remains broadly ranging between 1.3800 and 1.4000. The two trend lines I have drawn within the price chart below do not look very meaningful and are unlikely to be very useful – they are not telling us much about where the price might go next over the short term.
Both nearby support and resistance levels look strong, so I am prepared to take a long trade in this pair today from a bullish bounce rejecting 1.3855 but also, I will take a short trade if we get a bearish rejection of 1.3938. I would not expect either of these trades to run very far into profit so it should be advisable to manage any trade on a short time frame.
There is nothing of high importance scheduled today regarding either the GBP or the USD.