GBP/USD Forex Signal: Breakout from Bearish Price Channel
Bullish above the support level at $1.1958.
My last GBP/USD signal on 11th July was not triggered, as there was no bullish price action when either of my identified key support levels were reached.
Today’s GBP/USD Signals
Trades must be taken between 8am and 5pm London time today only.
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.1958, $1.1926, or $1.1878.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 time frame immediately upon the next touch of $1.2097 or $1.2165. 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 last forecast on 11th July that the overall picture looked conflicted due to a prevailing bearish trend but strong support nearby below, so I thought that scalping off support or resistance levels would be the best approach for the day trading the GBP/USD currency pair.
This was not a very good call as the price moved down quite heavily over the day, barely reacting at either of the two support levels which were reached.
The technical picture has now changed considerably after the price broke out of the bearish wedge chart pattern, or unsymmetrical price channel, which can still be seen within the price chart below. Recent candlesticks show a strong move up from the bottom, with well-defined new support levels and higher lows.
These are bullish signs, but of course the real long-term trend is bearish. Nevertheless, we are seeing a bit of a risk rally in markets and a decline by the USD, especially against riskier currencies such as the Pound. The outlook should remain bullish as long as the price remains above $1.1958.
The UK released slightly higher than expected inflation data yesterday, giving it the highest annualized rate of inflation of all G7 nations. However, this hardly affected the value of the Pound. The British economic outlook is far from great, but markets are not focusing on that right now. The driving factors are the US Dollar and risk.
I see the best approach today as hoping for a retracement to either of the two nearest support levels followed by a firm bullish bounce. I will be happy to take a long trade if that sets up.
I have no resistance level until just below $1.2100, but it can be seen on the price chart that the $1.2050 area has been inflective recently, so watch carefully if in a long trade heading to that level later.
There is nothing of high importance due today concerning either the GBP or the USD.
Ready to trade our daily Forex signals? Here’s a list of some of the best Forex trading platforms to check out.