Today’s GBP/USD Signals

Risk 0.75%.

Trades may only be entered prior to 5 pm London time on Thursday.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2754, $1.2700, or $1.2681.
• 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

• Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2823 or $1.2881.
• 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 forecast for the GBP/USD currency pair two days ago that even though the price had made a bullish breakout to a new 2.5-month high price, the move seemed to be over-extended so I thought that a short trade from $1.2881 was likely to be the best opportunity.

I was correct about the price not being likely to advance, but the price has stayed quite stable, consolidating bullishly over the key support level at $1.2753, which is confluent with the major quarter number at $1.2750. This looks likely to be today’s pivotal point.

It is notable that the Forex market is not moving much despite the stock market being very active. However, today’s ECB policy release may be a catalyst that will inject more volatility into this currency pair.

The price is not far from making a new 2.5-month high price.

I will be very comfortable entering a new long trade if we get a bullish bounce later off $1.2754, or if we see two consecutive higher hourly closes above $1.2823 during today’s London session. There is nothing of high importance scheduled today concerning the GBP. Regarding the USD, there will be a release of Unemployment Claims data at 1:30 pm London time.

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