My previous GBP/USD signal on 25th November was not triggered.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered before 5pm Tokyo time Wednesday.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3201, $1.3153, or $1.3141.
- 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.
- Take 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 $1.3268, $1.3289, or $1.3326.
- 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.
- Take 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.
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GBP/USD Analysis
I wrote in my previous GBP/USD forecast on 25th November that I had a bullish bias above $1.3128 and saw the price as likely to rise to $1.3164. This was a good and profitable call.
Although the price action has been consolidating for about one week now, what really stands out is the strength of the support levels, especially the nearest one at $1.3201 which is obviously extremely confluent with the round number at $1.3200.
Although we have a bearish double top at $1.3268, we have a bullish double bottom at $1.3201. Although we have a long-term bullish trend in the US Dollar, this is starting to look increasingly questionable as expectations of a Fed rate cut of 0.25% next week rise as high as 87%. The price action in the DXY (US Dollar Index) also doesn’t look very bullish right now.
I think that if the price retreats to $1.3201 and makes a bounce there, it will be an attractive long trade entry, even though I usually prefer to trade breakouts than dips in this currency pair.
The British Pound is one of the stronger major currencies mainly because UK inflation is so high (3.8%) that the Bank of England really has no ability to cut interest rates now.
There is nothing of high importance scheduled today regarding either the GBP or the USD.
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