My previous GBP/USD signal on 23^rd July was not triggered, as none of the key support or resistance levels were reached that day.

Today’s GBP/USD Signals

Risk 0.75%.

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

(Click on image to enlarge)

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2662, $1.2655, or $1.2640.
• 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 ride.

Short Trade Ideas

• Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2727, $1.2833, or $1.2883.
• 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 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 prediction on 23^rd July that it would probably be a very quiet day in the market in the absence of any major data releases or triggers for change in sentiment. Therefore, I thought that key support and resistance levels are likely to hold.

This was a good call, as they did, although none of the key levels were even reached during that day’s London session.

The technical picture now is more bearish, as after hitting a new 1-year high above $1.3000 just a few days ago, the price has been quietly but steadily selling off, due mostly to GBP weakness. This is significant at a time when some other currencies were rising against the greenback. We see weakness in the Euro and the British Pound.

The US Dollar has now begun to recover after its dip last week following a more dovish Federal Reserve policy meeting than expected in the USA. This logically means that we can expect even more downside here.

Due to the bearish environment, I see a short trade as likely to be the best opportunity which might set up today.

If the price enters the zone between $1.2726 and $1.2740 and rejects it, I will enter a short trade.

Alternatively, if the price gets established above $1.2750 later, that will be a bullish sign, likely signalling a rise higher to at least $1.2833.

There is nothing of high importance scheduled today concerning either the GBP or the USD.

More By This Author: