There is a general lack of direction in this currency pair.
Last Monday’s GBP/USD signal was not triggered as there was no bearish price action when the price first reached the resistance level identified at $1.3441 that day.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
- Long entry following a bullish price action reversal on the H1 time frame timeframe immediately upon the next touch of $1.3512, $1.3458, or $1.3401.
- 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
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.3552 or $1.3587.
- 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 last Monday that the price was rising and looked likely to continue going up until it hit the nearby resistance level at $1.3441. I thought that the market could turn bullish on the USD again quickly, so I was prepared to take a short swing trade from a bearish reversal which may set up at $1.3441.
If we got two consecutive hourly closes above $1.3441, especially within the first few hours after today’s London open, I thought it might be best to look for long scalp trades above $1.3441.
I was correct about the price reaching $1.3441, both that it would be reached, and that we should wait for two consecutive hourly closes above that level before going long, as there were not two consecutive closes above that level during the London session, so this was a good rule to keep out of any losing long trades.
Towards the end of last week, the Bank of England hikes its interest rate by 0.25% to a total rate of 0.50%, and although the hike was widely expected, it caused a bullish price spike of about 60 pips. However, the rate hike bounce did not last for long, and the Pound has now given up all its post-hike gains.
Frankly, this pair does not look like it is going to be exciting today. We will probably have a quiet Monday and little price movement in a directionless currency pair such as GBP/USD. If you are going to trade this currency pair, the best approach will probably be to expect the price to continue to consolidate between $1.3512 and either $1.3552 or $1.3587 (likely an upper limit so effective resistance), but it will be advisable to take and monitor trades on short time frames due to the low volatility.
There is nothing of high importance scheduled for today concerning either the GBP or the USD.
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