My previous GBP/USD signal on 4th April was not triggered, as none of the key levels were reached that day.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades must be taken before 5pm London time today only.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2376, $1.2337, or $1.2312.
- 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
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2507, $1.2578, or $1.2647.
- 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 almost two weeks ago that the technical picture was looking more bullish after breaking above the formerly strong resistance level at $1.2657. I wanted to enter a long trade following two consecutive higher hourly closes above $1.2663. This did set up, but the second candle was a pin bar, and that was hopefully enough to keep everyone out of this poor trade generated by my inaccurate call that day.
The technical picture now has generally become more bearish since about two weeks ago, with the US Dollar continuing to rise following its technical bullish breakout in late March from its narrowing triangle chart pattern. The British Pound has been one of the stronger major currencies, so has managed to hold up somewhat against the greenback, which is producing a consolidation pattern below the big round number at $1.2500 which is confluent with the key horizontal resistance level at $1.2507. The British Pound also gained a little strength this morning upon the release of UK CPI data, which was slightly higher than expected, at an annualized rate of 3.2% when 3.1% had been expected. This has reduced the pressure for a rate cut slightly upon the Bank of England, so is having a hawkish effect.
All factors considered, there is quite a wide space in which this consolidative price action can play out: between $1.2500 above and the support level at $1.2376. As there is a long-term bullish trend in the US Dollar, the best opportunity which might set up today would probably be a short trade from a bearish reversal at the $1.2500 area.
There is nothing of high importance scheduled today concerning the USD. Regarding the GBP, there will be a speech by the Governor of the Bank of England at 5pm London time.
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