My previous GBP/USD signal on 19th December produced a profitable short trade from the bearish rejection of the resistance level I identified at $1.2221.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken before 5pm London time today.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1940.
- 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 timeframe immediately upon the next touch of $1.2052 or $1.2111.
- 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 previous forecast for the GBP/USD currency pair on 19th December that both the support level at $1.2113 and the nearby resistance level at $1.2221 looked strong and likely to hold at least upon initial tests, although I favoured the long side. This was a good call as the bearish rejection of the resistance at $1.2221 was the trade of the day.
The technical picture is looking increasingly bearish as the medium-term bullish trend has run out of steam, with the US Dollar regaining some ground over recent days.
We have seen two new resistance levels form and suppress the price, most recently at $1.2052, after a level at $1.2111 was formed – this is a bearish sign.
However, the bearish picture is called into question by the fact that we keep seeing buying every time the price gets near or below the big round number at $1.2000.
I think that the price is not likely to move very far today, with a range between about $1.2000 and $1.2052 likely. If I am correct, this pair could be most attractive to scalpers today, who can look to trade reversals from any rejections of these levels which might set up later.
There is nothing of high importance due today concerning either the GBP or the USD.
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