My previous GBP/USD signal on 10th May was not triggered as the price did not reach any of the key support or resistance levels during that day’s London session.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be taken between 8am and 5pm London time today.
Long Trade Idea
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2466, $1.2419, or $1.2345.
- 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
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2539 or $1.2602.
- 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 previous forecast for the GBP/USD currency pair on 10th May that there were both bullish and bearish factors, so I thought that the major data release could provide an opportunity to trade a reversal following a spike. However, this did not work out.
The technical picture now is more bearish, as despite the long-term bullish trend and the long-term high that was reached not long ago, the price has continued to sell off. Part of this is renewed strength in the US Dollar, but it is notable this week that we have seen the Euro begin to outperform the Pound following disappointing British economic data. This suggests that when the Dollar is strong, the price here is going to be soft.
At the time of writing, the price is sitting on a key support level at $1.2466. However, I cannot say that this level looks likely to be pivotal, as we have a cup formation in the area the last time $1.2450 as reached, which is below that level, and may provide strong residual support. So, although the momentum is bearish, and does not look likely to reverse yet, how much further the price might fall is very questionable.
For these reasons, the safest opportunity which might set up today would be a long trade from a bullish bounce at $1.2419, below both aforementioned areas of potential support.
Concerning the GBP, the Governor of the Bank of England will be speaking at a conference at 10:50am London time. There is nothing of high importance scheduled today regarding the USD.
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