My previous GBP/USD signal on 7th July was not triggered as none of the key support or resistance levels were reached during that day’s London session.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm Tokyo time Thursday.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3515 or $1.3467.
- Place the stop loss 1 pip below the local swing low.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 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 $1.3548, $1.3584, or $1.3620.
- Place the stop loss 1 pip above the local swing high.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
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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 about two weeks ago that this pair was in a short-term bearish situation but I thought it wise to wait for the price to get established below $1.3561 before entering any new short trade. This was an OK call but not actionable on the day.
The picture now is more clearly defined: we have a US Dollar that is growing weaker again, in line with its clear long-term bearish trend. There are occasional retracements but the weakness in the greenback is a prime river of the Forex market, especially in the major pairs like this one. The Pound is showing a reasonable level of relative strength although that is nothing special, because inflation remains relatively high in the UK, and the Bank of England has to maintain a high interest rate.
Technically, a zoom out on the price chart here shows there was a bullish double bottom at $1.3375 some days ago, and ever since the second bottom, the price has been rising solidly. I do not say any reason for that to change today, so long trades are likely to be a better bet than short ones.
As I write, bulls are trying to push the price beyond the key resistance level just ahead at $1.3548. Trading this currency pair tends to work best by looking for breakouts. So, I think if we quickly get two consecutive higher hourly closes above $1.3550, that could be a good signal for a long trade entry, if there is no significant upper wick on the second candlestick. Beware of a potential bearish reversal around the time New York opens.
There is nothing of high importance due today regarding either the GBP or the USD.
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