There is plenty of room to fall.
Last Wednesday’s GBP/USD signal was not triggered as the price did not reach the key support level identified at $1.3319 until after the London close.
Today’s GBP/USD Signals
Trades may only be entered before 5pm London time today.
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.3353 or $1.3414.
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.
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.
I wrote last Wednesday that both the pound and the dollar had been showing some relative strength, but the dollar was edging ahead so the technical picture looked weakly bearish. I thought that the support level at $1.3319 looked likely to be strong, so I was looking for a short trade if we had gotten a bearish reversal at $1.3413, or if a New York close below $1.3319. This was a good call although it was not actionable, as I was correct that the support level at $1.3319 would hold if reached.
The technical picture remains weakly bearish. We see a more risk-off environment in the Forex market now as the new coronavirus omicron variant is assessed, which will determine its potential economic impact. This is tending to boost the Japanese yen but not so much the US dollar, while the pound is one of the weaker currencies, but not dramatically so.
Technically, we have new lower resistance at $1.3353. However, this is tempered by the fact that we have a higher swing low at about $1.3290 and at the time of writing, the price is showing short-term bullish momentum.
It looks likely that the price will rise to test $1.3350 today. If we get a bearish reversal there during the London session, it could be a good short trade. If the price gets established above $1.3353, I think a fast rise to $1.3400 would be likely, so there might be a fast scalp on the long side if that happens.
Regarding the USD, the Chair of the Federal Reserve will be testifying before Congress at 3pm London time. There is nothing of high importance scheduled today regarding the GBP.