Pound hit hard by easing of rate hike expectations.
My previous GBP/USD signal on 6th February was not triggered, as unfortunately the bullish price action that day took place just a few pips above the support level which I had identified at $1.2002.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered between 8am and 5pm London time today.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1999 or $1.1936.
- 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 timeframe immediately upon the next touch of $1.2071, $1.2118, or $1.2139.
- 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.
GBP/USD Analysis
I wrote in my previous forecast for the GBP/USD currency pair that the technical picture had become more bearish so we would probably see downwards price movement, but the price may not be able to get established below $1.2000 and further reaction there could even result in an up day by the New York close.
This was a good call as I was completely correct – the price found support just above $1.2000 and ended the day higher.
The technical picture now, ten days later, has not changed very much – we still see the support at $1.2000 holding, but bearish pressures increasing above with plenty of resistance levels in view, including a new lower resistance level at $1.2071. If we get two consecutive hourly closes above $1.2071, especially during the first half of today’s London session before New York opens, that will be a bullish sign indicating that the price will probably continue to rise to at least $1.2118.
If we get a retracement to $1.2000 before $1.2071 is hit, and the touch of the round number produces a firm bullish bounce, that could be a good entry opportunity for a short-term long trade or even a scalp.
If $1.2071 is hit first and produces a solid bearish reversal, this could be a good short-term short-trade entry, targeting $1.2000 – but probably best to exit any short trade a few pips above $1.2000 as the support there tends to kick in a little early.
There is nothing of high importance scheduled today concerning the GBP. Regarding the USD, there will be a release of PPI data at 1:30pm London time.
Ready to trade our free Forex signals? Here are the best Forex brokers in the UK for you to check out.