My previous GBP/USD signal on 24th August was not triggered, as there was no bullish price action when the support level at $1.1791 was first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered between 8am and 5pm London time Tuesday.
Long Trade Idea
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1600.
- 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 Ideas
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1727 or the bearish trend line shown within the price chart below, which is currently sitting just under $1.1850.
- 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 in my last forecast on 24th August that I was looking to trade this pair short, and I saw the area from $1.1878 down to the bearish trend line as a good zone in which to enter a short trade after a bearish reversal in price action. This was a good call, as the price rejected the trend line at the start of the London session and then fell by approximately 60 pips.
The technical picture remains bearish despite deceptive price action on the daily chart suggesting a bullish bounce, and a general weakening of the US Dollar over the short term. However, it is clear by looking carefully at the price chart below that the key development is new lower resistance at $1.1727, and as long as this level holds, the bearish trend should be considered to remain very valid, backed by a long-term decline in the GBP/USD currency pair which saw the price close at multi-year daily lows a few days ago.
Another factor supporting the bearish case is that there are no clear support levels for a long way below the current price, although the round number at $1.1600 may provide some support if reached.
I am seeking a short trade today from a bearish reversal we might get at $1.1727 later. The descending trend line just below $1.1850 may also be a good area to enter a short trade.
Regarding the USD, there will be releases of CB Consumer Confidence and JOLTS Job Openings data at 3pm London time. There is nothing of high importance scheduled today concerning the GBP.
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