Rejecting Key Resistance at $1.2114

The price will become more bullish if it gets established above $1.2137.

My last GBP/USD signal on 28^th June was not triggered, as none of the key levels I had identified that day were reached during the session.

Today’s GBP/USD Signals

Risk 0.75%.

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 $1.2043 or $1.1976.
• 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 $1.2114, $1.2137, $1.2212, or $1.2222.

• 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 last forecast on 28^th June that the price was making a relatively wide and choppy consolidation between $1.2338 and $1.2161. I thought that these levels were likely to hold over the day and maybe for longer. This was an accurate call but as the levels were not reached there were no trade signals.

The technical picture is much more bearish now, with the US Dollar regaining much of its strength in line with the long-term trend, and the British Pound looking weak on poor UK economic data and the Bank of England’s inflation forecast as high as 11%. This sent the GBP/USD price falling close to a new 2-year low last week.

The overall picture looks bearish, so it makes sense for swing traders to wait for retracements to resistance levels and look to take short trades there at reversals. We already saw this happen during the Asian session as the price rejected $1.2114.

I am happy today to look for short trades from $1.2114, $1.2137, or $1.2212. I have more confidence in the first two levels mentioned. These may be best taken as scalping trades as today’s London session is likely to die out after only about 4 or 5 hours today, as there is a major holiday in the USA. It will probably be wise to be conservative with taking any profits.

There is nothing of high importance scheduled today regarding either the GBP or USD. It is a major public holiday today in the USA.