My GBP/USD signal from Tuesday was not triggered, as there was no bullish price action when the support level at $1.3388 was first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm London time today.
Long Trade Idea
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.3273.
- Put the stop loss 1 pip below the local swing low.
- Adjust the stop loss to break even once the trade is 25 pips in profit.
- Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
Short Trade Idea
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.3458.
- Put the stop loss 1 pip above the local swing high.
- Adjust the stop loss to break even once the trade is 25 pips in profit.
- Take off 50% of the position as profit when the price reaches 25 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 on Tuesday that we were seeing the pound claw back some gains against the dollar, but the bullish move looked slow and weak and so far, had made up not even half of the loss, so the bulls did not look very convincing. I was expecting a bearish reversal at $1.3458. Unfortunately, the price did not reach that level over the day, but I was right to look to the bearish side as the price ultimately fell as low as the support level which I had identified at $1.3273.
The technical picture now is a clear and flat wide-ranging consolidation between $1.3458 and $1.3273. I think it is very likely that the price will remain within this range over today unless there is a major geopolitical development concerning the war in Ukraine which shocks markets, which would likely send the price strongly lower.
As the price is near the top of the range, I think a bearish reversal from $1.3458 would be an excellent short trade entry opportunity. It may be worthwhile entering a trade from a bearish reversal very close to $1.3458 even if the level is not quite reached – the half number t $1.3450 could also be good.
Concerning the USD, there will be a release of ISM Services PMI data at 3pm London time. There is nothing of high importance scheduled today concerning the GBP.