My previous GBP/USD signal on 6th January gave a profitable short trade from the resistance level at $1.3561.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm London time Thursday.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3402, $1.3391, or $1.3348.
- 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.
- Remove 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 $1.3449, $1.3503, or $1.3531.
- 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.
- Remove 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.
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GBP/USD Analysis
I wrote in my previous GBP/USD forecast on Tuesday that trades from reversals at either $1.3473 or $1.3534 would make sense, due to the prevailing range being likely to hold. This was an accurate and profitable call.
The technical picture now is notably more bearish, with the price falling quite steadily over the past couple of days and breaking down past several support levels. We have seen a new break in the past few hours, and the price now has room to fall as far as the support level which is very confluent with the round number at $1.3400. This looks highly likely to be today’s pivotal point – as it has been very strong, I am confident that it will hold.
There is a bit of momentum with the Dollar, as a more risk-off atmosphere takes hold ahead of a feeling that the US may be facing more military conflict soon, reinforced by President Trump’s statement that he wishes to see defence spending almost doubled. This should help push the price lower over the short term.
I see two potential good trade setups here today:
- A short trade from a failed test of the resistance level at $1.3449/50.
- A long trade from a bullish bounce at the first touch of $1.3402/00.
There is nothing of high importance scheduled today regarding the GBP. Concerning the USD, there will be a release of US Unemployment Claims data at 1:30pm.
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