GBP/USD Signal Today 21/01: Below $1.2250 (Chart)

(MENAFN- Daily Forex) My previous GBP/USD signal last Tuesday produced a profitable short trade from the bearish reversal at the resistance level at 2245's GBP/USD Signals

• Risk 0.75%.
• Trades may only be taken before 5pm London time today.

Long Trade Ideas

• Go long following a bullish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.2245, $1.2227, or $1.2206.

• Place the stop loss 1 pip below the local swing low.
• 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.

Short Trade Ideas

• Go short following a bearish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.2315, $1.2348 or $1.2384.

• 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 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/USD Analysis

I wrote in my previous GBP/USD forecast last week that the price was facing a very pivotal resistance zone centred on $1.2250. This was a good call, as this level held, and the resistance level just 5 pips below it held to the pip, producing a profitable short trade.

The technical picture has become more bullish one week later now, with the price consolidating and occasionally rising as it flattens out and leaves the area of the descending price channel represented by the linear regression analysis which is shown within the price chart below.

The US Dollar is in a long-term bullish trend, but this appears to have paused even though President Trump has now taken office and is mulling tariffs on some of the USA's trading partners which would typically boost the greenback. The British Pound has also been weak lately on poor economic data from the UK and the new British government's struggle for credibility with the markets over its economic projections. However, these issues appear to be taking a back seat.

Technically, we see a cluster of three support levels close to the current price, and this supportive area is likely to hold today and might drive the price higher. Nevertheless, a long trade here is certainly counter trend, so should be taken with caution and with conservative profit-taking.

I am prepared to take a long trade today from any bounce at any one of the three identified support levels.

EURUSD Chart by TradingView

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