My previous GBP/USD signal on 26th May was not triggered.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm Tokyo time Friday.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3543, $1.3499, or $1.3444.
- 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 Idea
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.3664.
- 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.
GBP/USD Analysis
I wrote in my previous GBP/USD forecast on Monday last week that although there were reasons to be bearish, as well as reasons to be bullish, a long trade from a breakout to a new high or a bounce at $1.3518 looked like the best potential trade opportunities. However, neither set up.
The technical picture is now looking more bullish, as the price consolidates between the 3-year high at $1.3592 and what looks like very pivotal support at $1.3543.
Breakouts tend to work better than dips as set ups for this currency pair, so I will wait for two consecutive hourly closes above $1.3592 without strong upper wicks before entering a new long trade. For a longer-term trade, you could just wait for a New York close on the daily chart above $1.3592 (ideally also above the round number at $1.3600) before going long.
Supportive reasons for a long trade include the relatively high inflation and interest rate in the UK, with the prospect of sustained high rates, and the long-term bearish trend in the US Dollar.
There is nothing of high importance due today regarding the GBP. Concerning the USD, there will be a release of Unemployment Claims data at 3pm London time.
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