My previous GBP/USD signal on 6^th January was not triggered as there was no bearish price action when the two nearest resistance levels were first reached that day.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be entered prior to 5pm London time today.

(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 $1.2188 or $1.2166 or $1.2096.
• 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 $1.2245 or $1.2270 or $1.2324.
• 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 last week that the price was likely to respect the new support level at $1.2435 as the day’s pivotal point.

This was a good call as the price did rise fairly strongly once it broke above that level, and it reached $1.2500 (and quite far beyond) just as I forecasted.

The technical and fundamental/sentimental pictures have become more bearish over the past week, although that may have changed over the last day or so.

Until yesterday, the price fell quite strongly, within the bearish price channel represented by the linear regression analysis shows within the price chart below. The price reached a new 1-year low below $1.2100, partly on US Dollar strength (the US Dollar index was making a new 2-year high at the time), and partly on bets against the British Pound which have emerged in the markets as the new British government’s fiscal projections are regarded with some incredulity by the capital markets, and the government plunges rapidly to very unpopular ratings in opinion polls.

Despite this bearish picture, we see a rebound from yesterday, partly due to the news that the incoming Trump administration may be prepared to implement tariffs on US important gradually rather than all at once, which weakened the Dollar a bit.

The price has made a weak bullish breakout beyond the top of the descending price channel and now faces what looks likely to be a very pivotal resistance zone centred on $1.2250. If the price can get established above $1.2265 today, it will probably rise to $1.2324. However, so far we are seeing a bearish double top at $1.2265, so the price might remain below this level.

There is nothing of high importance due today concerning the GBP. Regarding the USD, there will be a release of PPI data today at 1:30pm London time.

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