GBP/USD Forex Signal: Consolidation Below 1.3750

Adam Lemon

The short-term price direction is hard to predict from this price zone.

Last Monday’s GBP/USD signal was not triggered as there was no bearish price action at any of the three resistance levels which were reached that day.

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 1.3745, 1.3785, or 1.3830.

  • 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 1.3698 or 1.3674.

  • 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 Monday that the big question for this currency pair was whether the low near 1.3600 would hold. I thought it best to stand aside and wait for a retracement to that level or to look for a short at 1.3724. Neither course of action was fruitful, but no losses were caused either.

The price rose Monday and broke easily through the three nearest resistance levels as riskier currencies such as the British pound gained firmly against the U.S. dollar. The greenback has recovered a little bit over recent hours, but all this has produced in this currency pair is a narrow consolidation between approximately 1.3700 and 1.3750.

It is difficult to predict whether the next important movement will be up or down, beyond saying that above 1.3750 we are likely to see more upside, but a break below 1.3700 would signify a downwards move.

It is likely to be a quiet day in the Forex market today in the absence of news and ahead of the major events anticipated tomorrow, so it is quite possible we will see the price remain within this area from 1.3700 to 1.3750. As such, scalping reversals from either of these price areas if likely to be the best strategy to use in trading this currency pair today.

GBP/USD

There is nothing of high importance due today concerning 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.
Learn more from Adam in his free lessons at FX Academy

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