Last Wednesday’s GBP/USD signal produced a marginally profitable short trade and then a more profitable long trade from the bullish bounce at 1.3689, which held almost to the pip.
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 1.3760, 1.3797, or 1.3830.
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 1.3721 or 1.3674.
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 it was difficult to predict whether the next important movement would be up or down, beyond saying that above 1.3750 we were likely to see more upside, but a break below 1.3700 would signify a downwards move.
This was a good call as the price quickly rejected 1.3700 and rose from there to make the best trade of the day a long entry in that area.
The price of this currency pair was moving in a relatively choppy way a week ago, but we are now getting cleaner swings. However, the medium- or long-term direction is unclear. The best approach to trading this currency pair still seems likely to be taking short-term trades from reversals at some key levels, so it might suit scalpers.
The nearby resistance levels look stronger than the support levels on the other side, with 1.3721 looks likely to provide some bullish bounce.
The GBP is likely to be out of the Forex market’s focus today.
Concerning the USD, there will be a release of the ADP non-farm employment payrolls forecast at 1:15pm London time, followed by ISM Manufacturing PMI data at 3pm. There is nothing of high importance scheduled today concerning the GBP.