GBP/USD: Price is clearing trend line and 1.2250 so far
Last Thursday’s signals gave a short trade entry signal on the bearish reversal at 1.2244 – this would have been a losing trade unless the stop loss had been placed just above 1.2250 for extra resistance.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8am and 5pm London time today only.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2371.
Place 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 ride.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2244 or 1.2208.
Place 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 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 I would take a bearish bias today if we got a retracement to 1.2225 and a bearish reversal there, or if we got two consecutive hourly closes below 1.2185.
This was a good call insofar as it was enough to keep out of trouble that day, with the bearish turn happening a little higher at 1.2250.
The technical picture has become considerably more bullish, as riskier assets such as the British Pound advance everywhere against safe havens such as the Japanese Yen and to a lesser extent, the U.S. Dollar.
We see the price now making what seems to be a decisive bullish breakout beyond the medium-term descending trend line and the big psychological quarter-number at 1.2250.
It is clear the line of least resistance is upwards, and there are no resistance levels until 1.2371, so the price has plenty of room to rise.
I maintain a bullish bias on this currency pair today as long as the price is above 1.2250, up to 1.2371.
There is nothing of high importance due today concerning either the GBP or the USD.