GBP/USD Signal Today- 22/05: Bullish to 2-Month High (Chart) – DailyForex.com

 
My previous GBP/USD signal on 8th May was not triggered, as the bullish price action took place below the first support level.

Today’s GBP/USD Signals

  • Risk 0.75%.
  • Trades may only be entered prior to 5pm London time today.

GBP/USD Signal Today- 22/05: Bullish to 2-Month High (Chart)

Long Trade Ideas

  • Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2732, $1.2681, or $1.2647.
  • 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

  • Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2759 or $1.2823.
  • 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.

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    GBP/USD Analysis

    I wrote in my previous forecast for the GBP/USD currency pair on 8th May that we were seeing a consolidation although it was a slightly bullish development, as I saw the line of least resistance was upwards, which supports the bullish case.
    I was correct to be bullish over the longer term, although the forecast was no use on the day.
    The technical picture now is much more bullish, as we have seen the price rise during May.
    The price is now rising with strong short-term momentum to a new 2-month high price. This short-term momentum has been caused by UK CPI data released earlier today which showed that UK inflation is falling more slowly than expected, leading to more hawkish expectations of the Bank of England, which in turn pushes up the relative value of the British Pound. UK April Core CPI YoY came in at 3.9% against an expected 3.6%.
    The question today is really whether the CPI data will lead to a sustained price rise or is the current move just a spike which will quickly run out of steam. Maybe the best way to measure this would be to see whether we get two consecutive hourly closes above the nearby resistance level at $1.2759. The earlier this happens, the more bullish a signal it will be.
    I am suspicious of the durability of this bullish move, as it is still very counter to the strong long-term bearish price action which preceded this recover of recent weeks. This suggests that if the price rejects either of the nearby resistance levels, it could be good for at least a scalp trade short.
    There is nothing of high importance scheduled today concerning the GBP. Regarding the USD, there will be a release of FOMC Meeting Minutes at 7pm London time.
    Ready to trade our free Forex signals? Here is our list of the best British Forex brokers worth reviewing.
    Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

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