GBP/USD: Pivotal point at 1.2396
Yesterday’s signals were not triggered as unfortunately neither the nearest support nor resistance levels were reached, although the high and low of the day was just a few pips short of each so they were highly effective at capping prices.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2396.
Put 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.
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.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2367 or 1.2304.
Put 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.
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 yesterday that the picture was looking more bearish as the price broke strongly below the support level at 1.2396 which had seemed strong. I was ready to take a bearish bias if we had gotten a couple of consecutive hourly closes below 1.2378 and we did. Trading this move short gave a maximum potential profit of about 60 short pips, so it was a good call.
The price turned around and rose again once the Asian session got underway, and then the Bank of England’s monthly policy input has boosted the price to get established above 1.2368 and also to test the former pivotal point at 1.2396 which so far is holding.
I would be prepared to take a short trade today from a reversal at 1.2396 as I do not see the Bank of England doing enough to get the price established above 1.2396.
Concerning the GBP, there will be a release of the Bank of England’s Monetary Policy Report, Monetary Policy Summary and Votes, and the Official Bank Rate at 7am London time. Regarding the USD, there will be a release of Unemployment Claims data at 1:30pm London time.