Last Wednesday’s GBP/USD signals were not triggered, as there was no bearish price action when any of the resistance levels were first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm New York time today, as London has a public holiday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3898, 1.3925, or 1.3929.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3806, 1.3714, or 1.3693.
- 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 we looked likely to see lower prices here over the course of the day. I thought the resistance levels at 1.3897 and 1.3950 were likely to be strong and provide an attractive short trade opportunity, at least before the FOMC release that day.
I was completely wrong, as the price rose strongly and broke through both levels over the course of the day relatively easily.
The price is within a quite wide consolidation range between about 1.4000 and 1.3675. Trading reversals from either extreme of this range can therefore be a good and logical approach to exploiting this technical situation for as long as it lasts.
The U.K. is on holiday today, so between the end of Monday’s Asian session and the start of Monday’s New York session, the price will be likely to consolidate on very low volatility.
After falling strongly at the end of last week on USD strength, the price is consolidating at the support level of 1.3806. This level is likely to hold until New York comes online, and if it continues to hold during the first hour or so of the New York session, we may well see a strong rise – this level could be pivotal and might trigger another strong bearish move down if the price gets established below it.
I think the best approach today will be to wait for the New York open and watch to see what happens at 1.3806.
Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time. There is nothing of high importance due today concerning the GBP as it is a public holiday in the U.K. today.