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New lower resistance level at $1.2645.
My previous GBP/USD signal on 8th May was not triggered as none of the key support or resistance levels were reached during the day’s London session.
Risk 0.75%.
Trades must be taken before 5pm London time today.
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2533 or $1.2493.
- 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 $1.2698, $1.2726, or $1.2772.
- 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 8th May that the technical picture looked strongly bullish, with the British Pound having risen against the Dollar for many consecutive weeks and showing no sign of stopping.
I suggested that two consecutive higher hourly closes above $1.2650 would be a good long trade signal, and the fact that this did not set up and the day ended down shows that I was correct to see this level as a pivotal point.
The technical picture remains bullish over the long-term, but has become more bearish over the short-term, as price action suggests that the price is topping out from recent highs above $1.2650. This bearishness is reinforced by the printing of a new lower stairstep resistance level, at $1.2645.
On the other hand, the price looks like it is not quite ready to make a significant fall.
Technical analysis will not be as important when we get the release of US CPI data. The price will likely become extremely volatile at the release. A much better-than-expected (lower) number could see the price rise dramatically, as the Pound has been one of the strongest currencies against the Dollar lately. If the number is more or less as expected, trading reversals at key levels following a post-release spike will likely be the better trading strategy.
Concerning the USD, there will be a release of US CPI (inflation) data at 1:30pm London time. There is nothing of high importance scheduled today regarding the GBP.
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