GBP/USD Forex Signal: Resistance at $1.1451 Holds – 20 September 2022
British Pound continues to look weak and vulnerable to further falls.
My previous GBP/USD signal last Monday was not triggered, as there was no bullish price action when the price first reached any of the support levels which I had identified that day.
Today’s GBP/USD Signals
Trades must be taken between 8am and 5pm London time today only.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1350 or $1.1300.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 $1.1451, $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 Monday last week that we were seeing a more bullish technical picture supported by a weakening US Dollar, but that the release due later of very crucial US CPI (inflation) data could dramatically change sentiment.
This was a good call as the inflation data was meaningfully stronger than had been widely expected, and this had the effect of causing a sharp rise in the relative value of the US Dollar, which caused the price here to drop like a stone and easily slice through each of the three support levels which it quickly reached.
We have seen US Dollar strength basically persist since then, although it tapered off somewhat over the past 24 hours as markets now start to look to the Federal Reserve’s rate announcement tomorrow. However, the Pound remains one of the weakest major currencies, and the GBP/USD currency pair is now not far off the 37-year low price which it made last Friday at $1.1350.
Looking at the price chart below, we see a clear technical picture with the price respecting key technical features:
A long-term bearish trend, with the price close to its low.Strong resistance at $1.1451 which has just been firmly rejected.A bearish trend line holding the price down which is currently very confluent with the horizontal resistance level at $1.1451. This makes that level a very attractive entry point for a short trade, if we get a bullish retracement to it.Support at $1.1350.
These factors suggest we are likely to see lower prices and probably a down day today, but bears should beware of the support level at $1.1350.
I am comfortable being short of this pair now.
There is nothing of high importance due today concerning either the GBP or the USD.
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