Two key support levels close to $1.1300.
My previous GBP/USD signal on 3rd October was not triggered, as there was no bearish price action when the resistance level which I had identified at $1.1271 was first reached.
Today’s GBP/USD Signals
Trades must be taken prior to 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 $1.1335 or $1.1288.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 $1.1483 or $1.1510.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 on 3rd October that the price was showing strong bullishness, so I saw a high probability that the price would advance to $1.1350. However, I thought that the best trade opportunity which might set up would be a short trade from $1.1271 or $1.1350. This was a good call only insofar as the price rose to $1.1350, but it kept advancing beyond that.
The price fell again some days later as the US Dollar continued its strong long-term advance, but the technical picture is bullish again. This is due to a combination of two factors:
The British Pound has gained in strength since the UK government fired its finance minister and appointed a more credible candidate who quickly announced a reversal of almost all the unfunded tax cuts which had been previously announced.The US Dollar is selling off in a bearish retracement within its long-term bullish trend.
This has pushed the price well above $1.1300, and we see two support levels near that round number. At the time of writing the bullish movement is showing signs of running out of steam, so it looks likely that we will now see a retracement to these support levels, which are likely to be today’s pivotal point – it could be either level, although the lower level at $1.1288 will probably be stronger.
I am ready to take a long trade today from any bullish bounce at either of the two nearest support levels, at $1.1335 or $1.1288.
Note that the release of British CPI (inflation) data just before the London open could have a major effect on the price if the number is strongly deviant from the expected annualized rate of 10%. The release may be the catalyst which pushes the price down to the supportive area.
Regarding the GBP, there will be a release of CPI (inflation) data at 7am London time. There is nothing of high importance due today concerning the USD.