Support at $1.3152 Breaking Down

My GBP/USD signal on 16^th March was not triggered, as none of the key support or resistance levels which I identified were hit during that day’s London session.

Today’s GBP/USD Signals

Risk 0.75%.

Trades may only be entered between 8am and 5pm London time today.

• Go long following a bullish price action reversal on the H1 time frame timeframe immediately upon the next touch of $1.3152 or $1.3079.
• 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 Idea

• Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.3236.
• 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 on 16^th March that the best approach, which probably had low odds of success but a high potential risk reward ratio, would be to look for a long trade close to or at a retracement back to the support level at $1.3000.

Although the price never got back to $1.3000 that day, I was looking in the right direction, as despite earlier USD strength the price rose firmly over the day.

The picture now is different, with a strong USD and a relatively firm but gradually weakening GBP. The Bank of England hiked rates last week but there is some economic pessimism in the UK right now as tax hikes but the overall tax burden at its highest level for decades. The British Pound has been one of the stronger major currencies lately, but the USD has opened this week strongly and we see the price starting to break down past the support level at $1.3152. Unless it snaps back above this level very quickly at the London open, it will be likely to fall further over today until it reaches the next support level at $1.3079.

I think the best course of action today will be to wait until 9am London time and if the price is below $1.3150 at that time and looking bearish on the H1 and lower time frames, with some distance still to go to $1.3079, enter a short trade and monitor it on a lower time frame.

There is nothing of high importance scheduled today regarding either the GBP or the USD.