GBP/USD Daily Forecast

Bears and bulls are fighting the big number at $1.2000.

My previous GBP/USD trading recommendation on December 29th did not trigger as there was no bearish price action when the price first hit the resistance level I identified at $1.2052.

Today’s recommendations for trading the GBP/USD currency pair

  • The risk is 0.75%.
  • Trades can only be entered between 8am and 5pm London time today.

Buy trade ideas

  • Take a long trade after the upward price action reverses on the H1 timeframe right at the next level touch of $1.2002 or $1.1904.
  • Set your stop loss 1 pip below the local swing low.
  • Set the stop loss to break even once the trade is 25 pips in profit.
  • Take 50% of the position as profit when the price reaches 25 pips of profit and let the rest of the position run.

Sell ​​trading ideas

  • Take a sell trade after the price action reverses to the downside on the H1 timeframe right at the next touch of $1.2049, the trendline shown in the price chart below is currently at around $1.2074, or $1.2111.
  • Set the stop loss one pip above the local swing high.
  • Set the stop loss to break even once the trade is 25 pips in profit.
  • Take 50% of the position as profit when the price reaches 25 pips of profit and let the rest of the position run.

The best way to identify a classic “price action reversal” is to close an hourly candle, such as a pin bar, doji, outside candle 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 specified levels.

Analysis of trading the GBP/USD currency pair

I wrote in my previous GBPUSD forecast on December 29 that the technical picture was looking increasingly bearish due to the new resistance levels at $1.2052 and $1.2111. However, I also noticed buying at $1.2000, and I thought the price would stay between $1.2000 and $1.2052 throughout the day, and I was wrong about that.

The bearish resistance compensating for buying continued to tighten below $1.2000, but the situation looks increasingly bearish. This is probably due to the release of yesterday’s FOMC meeting minutes which showed that the Fed is very determined to hold on to rate hikes for some time, which is now likely to boost the US dollar.

We can draw a bearish trend line that shows downward pressure on the price, and now all that is left for the bears is to decisively push the price below the support level interconnected with the big round number at $1.2000.

If this level is broken, the price could drop to the support at $1.1904 which is also a medium term double bottom, so there might be a quick trade to take advantage of the long price action.

For longer-term traders, I see short trades from another downside rejection of $1.2049 or the trendline as good trading opportunities.

So far, the round number at $1.2000 is still holding, and this could also be a good price for a quick trade to take advantage of the long price action.


Graph generated by platform TradingView

Regarding the US dollar, there will be a release of the ADP Non-Farm Employment Outlook at 1:15pm London time. There is nothing expected today regarding the British Pound.

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