Last Wednesday’s GBP/USD signals were not triggered, as neither of the key support or resistance levels identified that day were reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be entered between 8am and 5pm London time today only.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.4240 or 1.4285.
- 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.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.4178, 1.4165, or 1.4109.
- 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 Wednesday that the price had turned bullish from 1.4100 and looked poised for another bullish move. I was ready to take a bullish bias until 1.4240 if we had gotten two consecutive hourly closes above the previous day’s high.
This was an OK call, as although the bullishness quickly collapsed and the price moved quite strongly lower, I was right to wait for a break of the previous day’s high instead of taking an immediate bullish bias, and this caution prevented a loss.
The technical picture has changed back yet again to look bullish as the price has reached a level only about 50 pips below what would be a new multi-year high. However, the bullish momentum appears to have run out of steam, as the price has struggled and failed to even stay above 1.4200. Nevertheless, there are two key support levels close below (at 1.4178 or 1.4165) and provided they hold, bulls will keep an edge.
The U.S. dollar is broadly weak.
I see the best approach today as looking for a long trade from a firm bullish bounce at either 1.4178 or 1.4165. The bounce needs to be strong and with a bigger hourly candlestick than the average of recent hours to be valid.
Regarding the USD, there will be a release of FOMC Meeting Minutes at 7pm London time. There is nothing of high importance scheduled today concerning the GBP.