My previous GBP/USD signal on 4th December gave a losing long trade.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm Tokyo time Wednesday.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3348, $1.3332, or $1.3307.
- 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.
- Take off 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 timeframe immediately upon the next touch of $1.3397 or $1.3471.
- 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.
- Take off 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 in my previous GBP/USD forecast almost two weeks ago that it made sense to look for long trades but I didn’t have any good support level, I was just saying buy the dip. This was a good call as it was the best approach to trading this currency pair that day.
The technical picture now is different. The US Dollar has begun stabilising after a period of significant decline, so support and resistance levels are starting to look more important.
The price chart below is showing a weakly bearish consolidation above the support level at $1.3348 which is confluent with a half number. Based on the previous behaviour of price there, it looks likely to be strong.
I think the best approach to trading this currency pair today will be to look for a long trade – which should probably at least start as a scalp – following a bullish bounce at $1.3348.
Even if the price get below $1.3348, there are two support levels close by below that which also look quite strong, so I doubt bears would be able to make much progress here.
There is nothing of high importance scheduled today regarding either the GBP or the USD.
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