Support at $1.3000 Still Holding

A major breakdown is likely if $1.3000 gives way.

My GBP/USD signal last Wednesday was not triggered as none of the key levels were reached that day.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today only.

• Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.3000.
• Put the stop loss 1 pip below the local swing low.
• Adjust the stop loss to break even once the trade is 25 pips in profit.
• Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.

Short Trade Ideas

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.3052, $1.3108, or $1.3181.
• Put the stop loss 1 pip above the local swing high.
• Adjust the stop loss to break even once the trade is 25 pips in profit.
• Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.

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 last Wednesday that the price continued to consolidate below $1.3181 over the past week, drifting down to arrive at the half number at $1.3050 which has been informally supportive.

The big round number and support level below at $1.3000 really stood out as potentially providing a great trading opportunity by acting as a major pivotal point.

As there are no support levels close by below $1.3000, so I thought the price could have a lot of room to fall further without meeting any supportive obstacles.

This situation has not really changed significantly over the past week. The price has twice very briefly dipped below that big supportive round number at $1.3000 before bouncing back, but it does not rise very far following these bounces.

I still think the best approach here will be to wait for the price to reach $1.3000 and be prepared to take long scalping trades, which could be left to run into potentially longer-term trades as this level may begin to act as long-term support. Yet the bigger opportunity will potentially be a strong breakdown below $1.3000 as there are no support levels below that for 200 pips at least.

There may also be short scalping opportunities from any of the resistance levels above the current price noted above, but such trades will probably work best as closely monitored scalps as the price action has been choppy lately.

Regarding the USD, there will be a release of US CPI (inflation) data at 1:30pm London time,. There is nothing of high importance scheduled for today concerning the GBP.