A key pivotal point is likely at $1.3000.
My GBP/USD signal last Wednesday was not triggered as there was no bearish price action when the price first reached the resistance level which I had identified at $1.3163.
Today’s GBP/USD Signals
Trades may only be entered between 8am and 5pm London time today.
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.3000.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 time frame immediately upon the next touch of $1.3163 or $1.3236.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.
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 last Wednesday that the price was showing a choppy consolidation between $1.3050 and $1.3150. I had thought that if the price hit $1.3163 and made a bearish reversal, it would make an attractive short trade entry.
I was correct about looking for opportunities on the short and not the long side, but I was wrong about the reliability of the resistance level I had identified at $1.3163, as it failed to hold the price and cap the high of the day. The correct level would have been $1.3181, which did act as effective resistance that day and has continued to do so since.
We have seen the price continue to consolidate below $1.3181 over the past week, with more movement on the bearish side as the US Dollar resumes its long-term bullish trend.
The price has now arrived near the half number at $1.3050 which has been informally supportive, although it is not really a key level. This means that we may see a rise from here over the short term, but it is hard to tell.
The big round number and support level below at $1.3000 really stands out as potentially providing a great trading opportunity by acting as a major pivotal point, either mid to long-term from a bullish bounce at $1.3000 if the level holds, or from a short trade if the price can break and get established below $1.3000. This is because there are no support levels close by below $1.3000, so the price could have a lot of room to fall without meeting any supportive obstacles.
Day traders may try to take some long pips from a bounce at $1.3050, but swing or position traders should only look to trade off $1.3000 or $1.3181, neither of which are likely to be reached today, so opportunities here are likely to be limited right now.
Regarding the USD, there will be a release of the FOMC’s Meeting Minutes at 7pm London time,. There is nothing of high importance scheduled for today concerning the GBP.