GBP/USD Forex Signal: Weakly Bullish / Consolidation

Adam Lemon

The British pound is showing minor relative strength.

Last Monday’s GBP/USD signal was not triggered as none of the key levels identified as support or resistance were reached that day.

Today’s GBP/USD Signals

Risk 0.75%.

Trades may only be entered between 8am and 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 1.3687 or 1.3746.

  • 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 1.3574, 1.3527, or 1.3502.

  • 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 Monday that as the price had been rising since last Wednesday with a sequence of higher lows and higher highs, with no obvious obstacle to further advances except the resistance level at $1.3687, it made sense to look to buy on dips on short time frames.

This was not a great call as the price fell over that day, but not by a large amount.

The price of this currency pair has not moved by much this week, as both the US dollar and the British pound are relatively strong. The support level I identified some time ago at $1.3587 has continued to hold firmly, so my weakly bullish / consolidative analysis has continued to hold up over a longer horizon.

There is not really a long-term trend here, and the technical picture remains weakly bullish / consolidative above the support level at $1.3587. If the price can get established below that level, it will be a bearish sign, but before that happens, it should continue to be an attractive level to use to enter short-term long trades on lower timeframes.

There has been a lot of talk lately speculating that the Bank of England will soon raise its interest rate, with some speculators betting that this will backfire and fail to prop up the value of the Pound as it will hurt the British economy, so this currency pair may start to become more interesting soon.

GBP/USD

There is nothing of high importance due 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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