A weaker Dollar and stronger Pound following hot UK inflation data last week has pushed this pair higher, reaching a new 3-year high price a few hours ago.
My previous GBP/USD signal on 21st May produced a profitable long trade from the bullish bounce rejecting the support level which I had identified at $1.2400.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades may only be entered before 5pm Tokyo time tomorrow.
Long Trade Ideas
- Long entry following a bullish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.3518, $1.3473, or $1.3458.
- 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 Idea
- Short entry following a bearish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.3664.
- 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.
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GBP/USD Analysis
I wrote in my previous GBP/USD forecast last week there were good reasons both technical and fundamental to try to get long of this currency pair. I thought that $1.3400 could give a good opportunity, and it did.
The price has continued to rise, notably last Friday when it finally decisively broke above the big round number area of $1.3500, and again today, when it made a new 3-year high not far below the next round number at $1.3600. However, as the London session got underway, we have been seeing a bearish retracement, although it is of a moderate size and intensity.
There are still just as many good reasons to be bearish: the weak Dollar, the strong Pound, the stronger than expected UK CPI (inflation) rate which has reached an annualized rate of 3.5%. This should maintain the Bank of England’s interest rate at the relatively high 4.25% for quite a while.
Bulls usually do better in this currency pair with buying breakouts to new highs than in buying dips or bounces within dips. However, in this case, the support at $1.3518 looks especially strong, so a bounce there could be a good long trade entry signal.
The only problem with trading this currency pair today is that both the UK and the USA are on holiday today, so there is now likely to be little price movement until Tokyo opens.
However new highs or $1.3518 could come into play as entry points during the Tokyo session Tuesday.
There is nothing of high importance due today regarding either the GBP or the USD. It is a public holiday in both the UK and in the USA.
Ready to trade our daily Forex GBP/USD analysis? We’ve made this UK forex brokers list for you to check out.