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GBP/USD Forex Signal: Possible Support Near $1.2000

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Pound hit hard by easing of rate hike expectations.

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My previous GBP/USD signal on 31st January was not triggered, as there was no bullish price action when the support level which I had identified at $1.2301 was first reached that day.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today.

Long Trade Ideas

  • Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2035, $1.2002, or $1.1936.
  •  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 timeframe immediately upon the next touch of $1.2100 or $1.2264.
  •  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 forecast for the GBP/USD currency pair that there was some downwards pressure, but I didn’t think we would see any dramatic price movement in the Forex market until the next day’s FOMC release, so all key support and resistance levels in this currency pair were likely to hold that day.

I was wrong, the price managed to break through a support level.

The technical picture has become more bearish, and this bas been brought about by developments concerning both currencies within this pair.

The British Pound has been negatively affected by the Bank of England’s indication last week that it expects to hike rates by only another 0.50% in the current cycle before reaching the terminal rate.

The US Dollar caught a bid last Friday when US NFP data was released showing a much stronger creation of new jobs than had been expected, leading to an increasing expectation that the Fed will have to hike more later this year to cool the economy sufficiently to keep bringing inflation down.

The factors have pushed the price down hard over recent days.

However, we may have seen the price start to bottom out over the past few hours, after it came within sight of the huge round number at $1.2000.

It is hard to see what will change the sentiment in favour of the US Dollar which seems to be dominant in the Forex market right now until late tomorrow when Fed Chair Powell speaks.

So, I think today we will 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.

I am ready to take a short trade from a bearish reversal at $1.2100 if the price does not reach $1.2000 first. I will not hold the trade open below $1.2000.

GBP/USD

There is nothing of high importance scheduled today concerning either the GBP or the USD.

Ready to trade our free Forex signals? Here are our selected top UK Forex trading platforms for you to check out.

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