My previous GBP/USD signal on 5th November was not triggered. My strongly bearish outlook had much to justify it, but it was not a good call.
 

(Click on image to enlarge)

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be taken prior to 5pm Tokyo time Wednesday.
 

Long Trade Ideas

• Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3070 or $1.3038.
• Put 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.
• 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.
   

Short Trade Ideas

• Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.3128, $1.3164, or $1.3185.
• Put 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.
• 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 in my previous GBP/USD forecast on 5th November that I had faith in the dominant bearish trend, so I was looking for a short trade from a rejection of the nearest resistance level at $1.3033.

This was not a successful approach, and in fact the day saw the price make a long-term low and begin a significant rise.

The technical picture now is more bullish, but only weakly so. There is to some extent a bullish trend in the US Dollar, but the price is currently moving against the Dollar as the chance of a Fed rate cut at the Fed’s December meeting is now seen as priced at over 80%, making it highly likely – much of the Dollar’s recent gain was on a declining prospect of a December cut.

Technically, we see a very clear, obvious resistance level at $1.3128 which has already held. If the price breaks above this level, that will be a bullish sign, and the price is likely to rise to $1.3164. However, it is worth noting there are several resistance levels quite close by, and the recent price action in these areas has been choppy, so I would be very careful with any long trade.

The technical set up looks better for a long scalp above $1.3128 than anything else, perhaps following a retest of $1.3128 which sees it hold as newly established support.
 

There is nothing of high importance scheduled regarding the GBP. Concerning the USD, there will be releases of PPI and Retail Sales data at 1:30pm.

More By This Author:

The Best Healthcare Stocks To Buy Now
The Best Cheap Stocks To Buy Now
Fastenal Stock Signal: Should You Fasten Your Portfolio?