Summary:
This article provides a potential trading signal for the GBP/USD currency pair. It highlights a recent price reversal from a 14-month low and suggests potential long and short entry points based on price action. The analysis considers both technical and fundamental factors affecting the pair.
Trading Recommendations (Valid Until 5 PM London Time Today):
Risk Management:
- Use a risk of 0.75% per trade.
- Crucial: Only enter trades before 5 PM London time.
Long (Buy) Trade Ideas:
- Entry Points: Look for a bullish reversal pattern (like a pin bar, doji, engulfing candle) on the 1-hour chart at any of these levels:
- $1.2188
- $1.2166
- $1.2096
- Stop Loss: Place the stop loss 1 pip below the recent low (swing low).
- Profit Taking:
- Move stop loss to break-even once the trade is 25 pips in profit.
- Take 50% profit at 25 pips.
- Let the remaining 50% run to potentially capture further gains.
Short (Sell) Trade Ideas:
- Entry Points: Look for a bearish reversal pattern (like a pin bar, doji, engulfing candle) on the 1-hour chart at any of these levels:
- $1.2245
- $1.2270
- $1.2324
- Stop Loss: Place the stop loss 1 pip above the recent high (swing high).
- Profit Taking:
- Move stop loss to break-even once the trade is 25 pips in profit.
- Take 50% profit at 25 pips.
- Let the remaining 50% run to potentially capture further gains.
Identifying Price Action Reversals:
- A “price action reversal” is identified by patterns like pin bars, doji candles, engulfing candles, or outside bars closing on the hourly timeframe. Monitor price action carefully at the given levels for these patterns.
GBP/USD Market Analysis:
Recent Developments:
- Last week, GBP/USD initially respected support at $1.2435, leading to an upward move, which aligned with previous forecasts.
- However, the technical and fundamental outlook turned bearish over the past week.
- The pair fell to a 14-month low below $1.2100 due to a strengthening US Dollar and concerns regarding the UK’s fiscal policy.
Current Situation:
- A rebound occurred following news of a possible gradual implementation of US tariffs, which weakened the US Dollar.
- The price has broken above a descending price channel but is now facing significant resistance around $1.2250.
- The market is showing a bearish double top at $1.2265, suggesting the price could remain below this level.
Key Levels to Watch:
- Resistance: $1.2250 – Potential key pivotal point. If the price establishes above $1.2265, it might reach $1.2324
- Support: $1.2188, $1.2166, $1.2096 – Potential reversal points.
Economic Data:
- GBP: No major UK economic news is scheduled for today.
- USD: US Producer Price Index (PPI) data will be released at 1:30 PM London time, potentially impacting price movement.
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