Short-term price action is turning bearish.
Last Thursday’s GBP/USD signal was not triggered as there was no bearish price action when the price first reached $1.3414.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
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Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.3376, $1.3340, $1.3304, or $1.3273.
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Put the stop loss 1 pip below the local swing low.
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Adjust the stop loss to break even once the trade is 25 pips in profit.
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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 Idea
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Put the stop loss 1 pip above the local swing high.
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Adjust the stop loss to break even once the trade is 25 pips in profit.
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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 Thursday that the technical picture had become considerably more bullish despite the still-valid long-term bearish trend. I thought that if the price continued to hold up above $1.3340, it would be likely to make a further advance over the day. This was a good call as the price rose firmly during Thursday’s London session without dipping below $1.3340.
The technical picture now is one of consolidation above the support level at $1.3376, although most of this consolidation pattern is probably because London has been on holiday for the past two days, unlike most other countries, and will only today return to full liquidity in GBP/USD trading. This means we are likely to see a sizeable move in price today.
The short-term price action is bearish, and the USD is strong today, so it looks as if we are going to see the price test the support level at $1.3376 from above today. If there is a bullish bounce off the first touch of this level during the London session, we may see a bullish reversal there that could give a long entry. If the price breaks below $1.3376 that will suggest a decline is likely but trading short on a breakdown seems risky as there is a cluster of support levels below that which would probably make any decline choppy and risky to trade.
The UK is seeing record highs in new coronavirus infections, but hospitalisations remain relatively low, so this seems unlikely to weigh on the pound. The USA is also seeing a record high in new cases anyway.
There is nothing of high importance scheduled today concerning either the GBP or the USD.
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