GBP/USD Forex Signal: Possible Double Bottom at 1.3600

Adam Lemon

The best course of action will be to stand aside until the price either makes a strong bullish reversal at 1.3600 or makes a bearish turn at one of the resistance levels nearby.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3674, 1.3698, or 1.3724.

  • 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 1.3588 or 1.3560.

  • 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

Forex markets have been dominated recently, especially over the past week, by a strong bullish trend in the U.S. dollar against almost every currency except a few which are acting as safe haven “risk off” currencies. Other currencies such as the British pound have seen a steady relative decline against the greenback. However, the trend is arguably weaker in this currency pair than it is in several other pairs, technically evidenced by the fact that the price has not made a new long-term low but instead seems to be making a bullish double bottom above the recent low not far below 1.3600.

The big question for this currency pair now is whether the low near 1.3600 will hold and see the price start to climb from here. If this scenario does play out, the GBP/USD currency pair would be a good medium to long-term buy. However, the odds of this scenario playing out are not very high, although the potential reward-to-risk in such a trade would be excellent.

I think the best course of action will be to stand aside until the price either makes a strong bullish reversal at 1.3600 or makes a bearish turn at one of the resistance levels nearby.

Of the three nearest resistance levels, the resistance at 1.3724 looks most likely to be the strongest one, so a bearish reversal off that level could be a great trade if it sets up later.

GBP/USD

Concerning the GBP, there will be releases of Flash Manufacturing and Services PMI data at 9:30am London time. Regarding the USD, the US releases of the same data for the USA will be released at 2:45pm.

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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