My previous GBP/USD signal on 19th April was not triggered as none of the key support or resistance levels which I identified were touched that day.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades must be taken prior to 5pm London time today.
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Long Trade Idea
- Go long following a bullish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.3425 or $1.3400.
- 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 Idea
- Go short following a bearish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.3458.
- 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 GBP/USD forecast two days ago that the price looked likely to rise, with the best trading opportunities likely to be bullish breakouts on shorter time frames. This was a good and accurate call, although the price did not get much higher that day after the time I wrote my forecast.
The picture is now even more bullish, as the price breaks strongly to a new 3-year high price, briefly trading above the resistance level at $1.3458.
Bulls are aided by hotter than expected UK inflation data, which was expected to come in today at an annualised rate of 3.3%, but which reached in fact 3.5%. That is quite a jump from the previous rate of 2.6% and will put pressure on the Bank of England to leave its relatively high interest rate unchanged at 4.25%.
The British Pound has been consistently strong lately, and on the flip side of this currency pair, the US Dollar is weakening as Trump’s tax bill falters in Congress, sending the greenback to a new 2-week low this morning.
So there seem to be good reasons both technical and fundamental to try to get long of this currency pair. The question is where to enter a trade? The obvious levels to watch for a bullish bounce to signal an entry are $1.3425 and $1.3400. As well as being obvious stairstep support levels, they are confluent with quarter and whole numbers, which should make them stronger.
It may be that the resistance at $1.3458 holds, as it seems to be surviving the London open at the time of writing.
There is nothing of high importance due today regarding either the GBP or the USD.
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