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Potential support above $1.24.
My previous GBP/USD signal on 17th May was not triggered as the low of the day was unfortunately just a couple of pips above the support level identified at $1.2419.
Risk 0.75%.
Trades must be entered prior to 5pm London time today only.
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2422, $1.2405, or $1.2309.
- 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 entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2479 or $1.2539.
- 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 in my previous forecast for the GBP/USD currency pair on 17th May that the technical picture had become more bearish, with the price is sitting on a key support level at $1.2466 that I expected would break down. However, I saw a long trade from the support at $1.2419 as a potentially good opportunity.
This was a good call, as the price did break down and quickly reached as low as $1.2422.
Action over the past couple of weeks or so has been dominated by this wide-swinging consolidation we see between the round numbers at $1.2300 and $1.2500, or to be precise, $1.2478. Within this area, we only have a little zone of support just above $1.2400 which does not look strongly likely to hold.
Due to this dominant consolidation, the only potential opportunity I see setting up here today would be a long trade from a strong bullish bounce that would ideally reject the round number at $1.2400 and quickly bounce back to reach a price above $1.2425. This could be a good signal to trigger a long trade entry.
There is plenty of US data due later as the New York session gets underway, so we are likely to see more volatility at this time, which could drive a rejection of the $1.2400 area.
Concerning the USD, there will be a release of the ADP Non-Farm Employment Change Forecast at 1:15pm London time, followed by Unemployment Claims at 1:30pm and ISM Manufacturing PMI at 3pm.
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