My previous GBP/USD signal last Wednesday could have produced a profitable short trade from the bearish rejection of the resistance level which I had identified at $1.2191.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken before 5pm London time Wednesday.
Long Trade Idea
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.1958.
- Place the stop loss 1 pip below the local swing low.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.2130, $1.2191, or $1.2241.
- Place the stop loss 1 pip above the local swing high.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 50% of the position as profit when the price reaches 25 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.
GBP/USD Analysis
I wrote in my last forecast on 3rd August that the technical picture had become more bearish due to downward waves and increased volatility, suggesting the end of the rally had happened.
I thought that the new lower “stairstep” resistance at $1.2191 could be a good opportunity to enter a short trade in this currency pair.
This was a good call as the price did move down over the day after topping at $1.2191.
The technical picture has become a little more bearish since last week, with the price continuing to be held by a descending price channel which is drawn within the price chart below. The price has also printed new lower resistance at the very clearly defined level of $1.2130, which is somewhat confluent with the upper trend line of the price channel.
There are no key support levels for a long way below.
These factors suggest the best opportunity which may set up today would be a short trade from a bearish reversal at the $1.2130 area, which looks pivotal.
If the price gets established above that level later it can be considered a technically significant bullish breakout, although there are several resistance levels close by so there may not be much room for any strong rise.
Markets are awaiting tomorrow’s US CPI data, so there may not be any strong directional movements in US Dollar currency pairs today anyway before the release.
There is nothing of high importance due today regarding either the GBP or the USD.
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