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There is increasing pessimism over British economy.
My last GBP/USD signal on Thursday was not triggered, as none of the key levels identified were reached during that day’s London session.
Today’s GBP/USD Signals
Risk 0.75%.
Trades my only be entered between 8am and 5pm London time today.
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.2553 or $1.2437.
- 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 Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.2629 or $1.2698.
- 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 last Thursday that the price was likely to consolidate between $1.2624 and $1.2437 until the release of US Advance GDP data, with the best approach likely to be fading any post-release spike to either level.
The price did remain within these levels over the entire London session, so my call was at least partially correct.
The price of the GBP/USD currency pair has been rising recently, but this has more to do with the decline of the US Dollar than a rise from the Pound. This remains the case as now the Dollar is beginning to strengthen again, we see the price topping out below the key resistance level at $1.2629.
The nearest support level sits at $1.2553, and it is likely to be quite strong as it was firmly formed and is confluent with the half number at $1.2550. If the price can get established below that level, it could drop quickly as far as $1.2450.
I will be happy to take a short trade from $1.2629 if we get a bearish reversal there early in today’s London session, or a long scalp from $1.2553 later.
Regarding the USD, there will be releases of ISM Manufacutring PMI data and JOLTS Job Openings at 3pm London time. There is nothing of high importance scheduled today concerning the GBP.
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