GBP/USD Forex Forecast: Bullish Over $1.2167
Today’s GBP/USD Signals:
Risk 0.75%.
Trades must be taken before 5 pm London time today only.
Long Trade Idea
- Long entry after a positive price action reversal on the H1 timeframe on the next touch of $1.2167, $1.2127, or $1.2102.
- Set the stop loss one pip below the current swing low.
- After the trade is 25 pips in profit, move the stop loss to break even.
- When the price reaches 25 pips in profit, take 50% of the position as profit and allow the rest to ride
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2264 or $1.2290.
- 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 simplest way to see a typical "price action reversal" is for an hourly candle to finish with a higher close, such as a pin bar, doji, outside, or even simply an engulfing candle. You can profit from these levels or zones by observing the price activity that occurs at the specified levels.
GBP/USD Analysis
The technical picture here is still optimistic, but just marginally so. The path of least resistance is undoubtedly higher since there is still an opportunity to advance before reaching the nearest resistance level at $1.2264. Below the present price, there is a cluster of three closely packed support levels, all above the round number at $1.2100, and the price is unlikely to be able to break down below all three today.
Moving to fundamentals, the US Dollar is in a long-term decline, aided by the ongoing financial crisis, which is putting pressure on the Fed to stop rising rates, or at the very least to make this week the final, little boost of the current cycle.
The British Pound received a modest lift from last week's UK budget estimates, which saw the UK escaping the previously-expected recession later this year, while inflation forecasts were also lowered. For these reasons, I would gladly join a new long trade if we see a bullish bounce at the nearest support level of $1.2167, with a target of $1.2264.