GBP/USD Forex Signal: Approaching Long-Term Low Prices

Adam Lemon

A short trade would likely have more potential, so any long trade should be carefully monitored on a short time frame.

Last Wednesday’s GBP/USD signals were not triggered as there was no suitable price action when the price first reached any of the key levels.

Today’s GBP/USD Signals

Risk 0.75%.

Trades may only be entered between 8am and 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 1.3773 or 1.3869.

  • 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 1.3653 or 1.3617.

  • Place 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.

  • 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 the technical picture had become more bearish, but support below, confluent with the big psychological quarter-level at 1.3750, also looked likely to be strong.

Therefore, I was prepared to take a long trade from a bounce at 1.3753 or a short trade from a bearish reversal at 1.3810.

I was correct about the generally bearish direction as Wednesday was a down day, but I was wrong about the key levels holding.

The U.S. dollar has found some strength despite its recent weakening within a long-term bullish trend, so has been rising in line with its long-term trend. Until a couple of hours ago from the time of writing, the British pound was the weakest major currency. However, we have begun to see a little buying of this currency pair as the Asian session concluded which has pushed the price up a bit, but the rise is far from convincing.

The support below at 1.3653 marks a long-term low and so is likely to be very pivotal – it has already made its presence felt over recent hours as support although it has not been reached yet.

I am prepared to take a long trade from a bullish bounce at 1.3653, or if this level breaks down, a short trade following two consecutive hourly closes below the level.

A short trade would likely have more potential, so any long trade should be carefully monitored on a short time frame.

GBP/USD

Concerning the USD, there will be a 10-year bond auction at 6pm London time. There is nothing of high importance due today regarding the GBP.

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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