The previous GBP/USD indicator from December 16 led to a loss on a long trade.
Current GBP/USD Signal
The risk level is set at 0.75%.
Trades should only be made by 5 PM Tokyo time on Tuesday.
Long Trade Suggestions
- Consider entering a long position following a bullish reversal in the H1 timeframe after touching $1.3473, $1.3447, or $1.3428.
- Keep your stop loss just below your local swing low by 1 pip.
- When the trade hits a profit of 25 pips, adjust your stop loss to the breakeven point.
- At the same profit threshold, take 50% of your position as profit and let the rest remain.
Short Trade Suggestions
- Look to enter a short trade immediately after the next touch at $1.3534, $1.3561, or $1.3587 following a bearish price reversal in the H1 timeframe.
- Set your stop loss 1 pip above your local swing high.
- When the trade achieves 25 pips in profit, move your stop loss to breakeven.
- As before, at 25 pips, close half of your position for profit and keep the remainder.
A reliable way to spot a classic “price reversal” is observing an hourly candlestick, like a pin bar, doji, or an engulfing candle that closes higher. Monitoring price movements at these key levels can be beneficial.
GBP/USD Analysis
In my previous GBP/USD forecast from about two weeks ago, I mentioned that the support level at $1.3348 seemed robust.
While this wasn’t reached that day, the majority of the London session experienced a bullish trend, which affirmed our directional bias.
Although the pair has gained some ground in the last fortnight, it has mostly been consolidating sideways these past few days. Given the prevailing trend is bullish, this can be classified as a bullish consolidation.
I think it might be strategic to trade from a reversal at either $1.3473 or $1.3534, but the longer-term trend and the overall weakness in the US economy suggest that a long trade could be more advantageous.
With today’s low liquidity, price fluctuations might be more erratic.
There’s no significant news regarding the pound or the US dollar to note today.
