My previous GBP/USD signal on 4th February produced a profitable short trade from the bearish rejection of the resistance level at $1.3729.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades may only be entered before 5pm London time Wednesday.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3657, $1.3632, or $1.3788.
- 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.
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Short Trade Ideas
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.3700, $1.3729, or $1.3788.
- 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.
GBP/USD Analysis
I wrote in my previous GBP/USD forecast one week ago that the resistance level at $1.3729 looked strongly likely to be pivotal, and I expected a bullish breakout to happen there.
I was wrong about the bullish breakout, but I was very right about the pivotal level, with a nicely profitable short trade setting up from a bearish reversal at that level.
This weak we have seen renewed weakness in the US Dollar, although the British Pound has been one of the weaker major currencies, so we haven’t seen much in the way of gains here. However, that seems to have changed towards the end of the London session, with the price starting a firm move higher, which is now approaching the resistance level and round number at $1.3700.
I think the thing to watch for now will be whether the price consolidates a bit below that round number before breaking above it with some conviction. That could be a short-term long trade, but there might be better opportunities in other currency pairs today.
Another thing to watch out for is some very important US data which will be released near the New York open which could move the USD and so push the price unexpectedly through technical levels, at least temporarily.