GBP/USD Forex Signal: Broad Bearish Consolidation

Selling pressure whenever the price approaches $1.3650.

My last GBP/USD signal on February 14 was not triggered, as none of the key support or resistance levels I identified were hit.

GBP/USD Signals Today

Risk 0.75%.

Trades can only be entered before 5pm London time today.

Long Business Ideas

  • Go long after a bullish reversal in price action on the H1 timeframe immediately after the next touch of $1.3388 or $1.3273.
  • Place the stop loss 1 pip below the local swing low.
  • Move the stop loss to break even once the trade has reached 25 pips of profit.
  • Withdraw 50% of the position as profit when the price reaches 25 pips of profit and let the rest of the position roll.

Short business idea

  • Go short after a reversal of bearish price action on the H1 time frame immediately after the next touch of $1.3458.
  • Place the stop loss 1 pip above the local swing high.
  • Move the stop loss to break even once the trade has reached 25 pips of profit.
  • Withdraw 50% of the position as profit when the price reaches 25 pips of profit and let the rest of the position roll.

The best method to identify a classic “price action reversal” is to close an hourly candle, such as a pin bar, doji, outside, or even just an engulfing candle with a higher close. You can exploit these levels or areas by observing the price action that occurs at the given levels.

GBP/USD Analysis

I wrote two weeks ago that the price was likely to consolidate between $1.3458 and $1.3664 in the near term, but then would likely fall below $1.3458 before rising above $1.3664.

It was a good and accurate call as the drop below $1.3458 finally happened about ten days later.

Market sentiment remains dominated by the issue of the Russian invasion of Ukraine as NATO sends arms to the Ukrainian state, which means we will effectively see a proxy war between NATO and Russia which presents a risk of escalation towards a direct confrontation. Shorter term concerns include the impact of sanctions against Russia on the economies of EU countries as well as the UK. In this time of crisis, the US dollar tends to do well, while the pound is expected to be weak. Fundamental factors are therefore likely to favor the bears on this currency pair.

Technically we see the price slowly recouping some of the heavy losses suffered last Thursday as news of the Russian invasion broke, but so far the upside move is slow and weak and hasn’t even offset half of the loss, so the bulls don’t look very convincing. The price is not far from a resistance level at $1.3458, and I think a bearish reversal there if it establishes would be a great signal for a short trade.

Regarding the USD, there will be a release of ISM Manufacturing PMI data at 15:00 London time. There is nothing major expected today for the GBP.

Comments are closed.