Price has room to fall to $1.1958.
My previous GBP/USD signal last Tuesday could have produced a profitable short trade from the bearish rejection of the resistance level which I had identified at $1.2130, which capped the day’s high price right to the pip.
Today’s GBP/USD Signals
Trades may only be entered between 8am and 5pm London time Tuesday.
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.1958 or $1.1926.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 time frame immediately upon the next touch of $1.2100 or $1.2170. 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.
I wrote in my last forecast on 9th August that we had new lower resistance at the very clearly defined level of $1.2130, which was somewhat confluent with the upper trend line of the price channel.
I thought a short trade from a bearish reversal at that level would likely be the best set up in this currency pair, and that was a good and accurate call.
The price rose in the later section of last week, but we have seen the US Dollar make a recovery so far again this week, making gains against the British Pound yesterday. This downwards price movement looks most likely to continue, as we see a bearish technical situation with the price selling off within descending bearish wedge chart patterns. Even more significantly, there are no key horizontal support levels until $1.1958, so the price has plenty of room to fall further. However, it is possible that the big round number at $1.2000 could be supportive if reached.
The British Pound is relatively weak as the UK economy is widely seen as having a poor outlook, with the Bank of England forecasting peak inflation later this year above 13%, and a recession lasting five quarters.
I would not pay much attention to the trend lines shown in the price chart below, but a bearish reversal from $1.2100 if we get a retracement later could be a good short trade opportunity. Scalpers might find short trades on retracements below that level, as long as the price is above or has cleared $1.2000.
There is nothing of high importance due today regarding either the GBP or the USD.
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