Last Wednesday’s GBP/USD signal was not triggered as the price never reached any of the key levels during the day’s London session.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be taken before 5pm London time today.
Long Trade Idea
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.3375 or $1.3340.
- 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 $1.3441 or $1.3490.
- 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 Wednesday that the price was likely to move little before the FOMC release, so I was looking for scalps off reversals at key levels. This was an accurate call as the price did remain within the levels over the day as I had expected.
Since last Wednesday’s FOMC release, the US dollar has strengthened, which helped drive the price of this currency pair down. However, it is notable that the GBP/USD fell less than other comparable pairs such as the EUR/USD did, suggesting that there is some relative strength in the British pound.
Since this week opened, the US dollar has sold off a little, allowing the price here to make what looks like a bullish bottom at $1.3375. The price is now rising and looks somewhat likely to continue going up until it hits the nearby resistance level at $1.3441. This is very likely to be today’s pivotal point, and what will happen at that price will likely determine what happens to the price over the rest of the day.
I believe the market could turn bullish on the USD again quickly, so I am prepared to take a short swing trade from a bearish reversal which may set up at $1.3441.
If we get two consecutive hourly closes above $1.3441, especially within the first few hours after today’s London open, it might be best to look for long scalp trades above $1.3441, either buying on the dips or at a bearish retracement to $1.3441 as new support.
There is nothing of high importance scheduled for today concerning either the GBP or the USD.