SIGNAL FOREX

GBP/USD Forex Signal: More Bearish Below 1.3810 – DailyForex.com


Last Monday’s GBP/USD signals were not triggered as there was insufficiently bearish price action when the price first reached the two identified resistance levels.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3810, 1.3867, or 1.3893.

  • Put the stop loss 1 pip above the local swing high.

  • Adjust the stop loss to break even once the trade is 20 pips in profit.

  • Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3753 or 1.3653.

  • Put the stop loss 1 pip below the local swing low.

  • Adjust the stop loss to break even once the trade is 20 pips in profit.

  • Take off 50% of the position as profit when the price reaches 20 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 last Monday that the technical picture had become more bullish, with the British pound one of the strongest major currencies. We were seeing some convincing bullish movements and most impressive of all in this direction has been the new stairstep support established at 1.3810. This level looked like it is going to hold so I would be happy to take a long trade at another bullish bounce there. This was a pretty good call as although the price did not reach 1.3810 again that day, the price rose quite firmly over the day, so I was correct about the likely price direction.

The picture now is more bearish, as it was notable yesterday that while other currencies such as the euro and Australian dollar were gaining against a weaker U.S. dollar, the pound fell. Additionally, the price has just broken below the formerly strong pivotal support level at 1.3810 which now appears likely to act as resistance.

Despite this more bearish picture, the support below confluent with the big psychological quarter-level at 1.3750 also looks likely to be strong.

Therefore, I am prepared to take a long trade from a bounce at 1.3753 or a short trade from a bearish reversal at 1.3810.

If the price can get established later below 1.3750 that would be a significant bearish technical development.

The price will probably hold between 1.3753 and 1.3810 until the FOMC release due later.

Concerning the USD, there will be a release of the FOMC Meeting Minutes at 7pm London time. There is nothing of high importance due today regarding the GBP.

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