My previous GBP/USD signal on 22nd May was not triggered, as the bullish price action took place below the first support level. The support level at $1.2681 gave a great long trade the following day.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades must be taken before 5pm London time Wednesday.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2771, $1.2700, or $1.2681.
- 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
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2823 or $1.2881.
- 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.
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GBP/USD Analysis
I wrote in my previous forecast for the GBP/USD currency pair on 22nd May that we were seeing short-term bullish momentum, but that it probably would not last. I was correct over the day, although the next day the price began to rise firmly again.
The technical picture is now more bullish, as the price has continued to rise, breaking out bullishly to a new 2.5-month high price, even trading above the $1.2800 handle.
The problem for bulls is that this bullish move seems to be over-extended and will likely need to retrace and resume at a slower pace, if at all. This suggests that despite the bullishness, a short trade following a spike to a key resistance level could be an excellent speculative strategy here.
A short trade at a sudden touch or bearish rejection of $1.2881 looks likely to be the best opportunity here.
On the long side, an entry following a bounce off $1.2793 (not shown as a level in the price chart below, but potentially supportive) or $1.2771 look attractive.
There is nothing of high importance scheduled today concerning the GBP. Regarding the USD, there will be a release of JOLTS Job Openings data at 3pm London time.
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