GBP/USD Forex Signal: Bearish Below 1.3721

Adam Lemon

The pair is trading at 3-week lows.

Last Wednesday’s GBP/USD signal was not triggered as none of the key levels specified were reached that day.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be entered before 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 1.3721 or 1.3765.

  • 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 1.3674 or 1.3588.

  • 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 action was choppy, and the direction was going nowhere.

The only good opportunities I saw here as possible were reversals from 1.3900 or 1.3721.

This was an indifferent call as none of the key levels were ever reached, so there was no chance of a signal from a valid reversal.

The technical picture has changed over the past few days as markets have taken on more of a risk-off sentiment. This has boosted the USD at the expense of all other major currencies, especially the commodity currencies. The GBP is falling against the USD too, but it is worth noting that the GBP is maybe holding up a little better than many other currencies.

The bearish technical environment with the price breaking strongly to new lows suggests that short trades have a higher probability of success provided the price remains below the nearest resistance level at 1.3721. I will be happy to enter a short trade from a bearish reversal at that level.

Another option for shorts, which would probably be riskier, would be a retracement to the next resistance level at 1.3765 followed by exhaustion and then a bearish turn, but I think this is unlikely to set up.

GBP/USD

There is nothing of high importance scheduled today regarding 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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