The price is looking likely to consolidate over the near term.

My last GBP/USD signal on 4^th July was not triggered, as the bearish price action did not take place at any of my identified key resistance levels.

Today’s GBP/USD Signals

Risk 0.75%.

Trades may only be entered before 5pm London time today.

• Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.1934 or $1.1912.
• 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 the descending trend line shown within the price chart below or $1.2097.
• 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 in my last forecast on 4^th July that the overall picture looked bearish, so it made sense for swing traders to wait for retracements to resistance levels and look to take short trades there at price reversals.

I was correct to look to the short direction, as the day’s major move was downwards, but the turn did not take place at any of my resistance levels.

The price is considerably lower now, but the technical picture is conflicted. The price chart below shows that the movement of the past few days and arguably longer is held by a bearish price channel. However, we have strong support near $1.1900 and a firm higher low near there. Yet whenever the price gets near the top of the channel, it sells off strongly. This suggests that the bears have the upper hand, but strong buyers are still stepping in. We have seen bullish reversals in both the EUR/USD and the GBP/USD currency pair which put the continuation of the strong long-term bearish trends into question.

We have seen major political developments in the UK in recent days with the resignation of Prime Minister Johnson, but they seem to be having little effect upon the Pound.

There is not a lot of room between likely support and resistance, so I think the best approach today will be to try to scalp in either direction after the London open from either support or resistance, whichever is hit first, and monitor the reversal trade on a short time frame and hope for a breakout. Be careful and conservative with profits and be ready to exit, because price movement could be limited and choppy.

Concerning the GBP, the Governor of the Bank of England will be testifying on the stability report before parliament at 3:15pm London time. There is nothing of high importance scheduled today regarding the USD.

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During last week’s trading, GBP/USD rebounded sharply from its March 2020 lows and could look to extend its recovery in the coming days. A lot depends on US bond yields and the impact of statements from Fed policy makers and a looming wave of UK economic numbers. The GBP/USD price collapsed below the psychological support 1.2000, which was expected since it fell to the 1.2175 support. The currency pair has settled around the 1.2260 level since yesterday.

The British pound slumped briefly below 1.20 against the dollar last week only to rebound to the 1.24 level last Thursday when the Bank of England (BoE) announced the fifth rate hike since December. This was followed by a sharp rise in market expectations for the bank rate over the coming months. Sterling was also helped significantly when the US dollar fell in general almost along with US government bond yields in the wake of the US Federal Reserve’s monetary policy decision for June.

While the increasingly “hard” market expectations of UK interest rates could be discouraged by either the Bank of England itself or any number of economic numbers set to emerge from the UK this week, they have so far provided a significant boost to the rate of the pound against the dollar. The rising bond yields in Britain combined with falling US yields to raise the spread or gap between these yields in a supportive way for the pound after the Federal Reserve economic forecast in June indicated that the bank was likely to raise US interest rates only as much as financial markets had I did that. Already envisaged for this year.

Last week, the Federal Open Market Committee (FOMC) took another important step toward meeting the inflation target by raising the federal funds rate target by 75 basis points.

To the extent that the above trend in the bond market continues, sterling may help reverse some of the sharp decline in the second quarter.

However, the risk is that the US dollar strengthens regardless of what happens in the bond market this week if comments from Federal Reserve Chairman Jerome Powell on Wednesday and Thursday, or other members of the Federal Open Market Committee (FOMC), exacerbate emerging concerns about the possibility of a US or even global recession in the near future. This is a possibility given the extent to which the Federal Reserve and other global central banks are increasingly focused on curbing inflation to rule out all other concerns including the potential fallout for the labor and employment markets.

According to the technical analysis of the currency pair: The price of the GBP/USD currency pair lacks the strength factors to break through the general bearish trend. As I mentioned before, the continuation of the pessimism of the Bank of England and the negative results of the British economic data negatively affect any attempts of the GBP/USD to rebound to the highest and closest levels. The resistance for the currency pair is 1.2320 and 1.2400 and I still prefer to sell the currency pair from every bullish level.

On the other hand, the return of the sterling dollar price to the vicinity of the support 1.2175 will support expectations again to move towards the psychological support level 1.2000, thus increasing the strength of the downward trend.

Crypto in general looks horrible right now and Neo is going to get crushed every time it tries to rally.

Neo has fallen slightly during the trading session on Thursday as we continue to see crypto get hammered. Neo is pretty far out on the risk spectrum, so it is difficult to imagine a scenario where it would suddenly take off without some type of help from the outside. The most commonplace of help would be Bitcoin and Ethereum, both of which are at least trying to stabilize, but it is more likely than not going to be a situation where we will ultimately have plenty of sellers.

There is a lot of fear in the world right now, and that does not bode well for crypto, and therefore it is difficult to imagine a minor coin like this suddenly attracting a lot of inflow. If we do rally from here, the market will more likely than not see quite a bit of resistance at the $16.50 level, which is where we had previously seen so much support. “Market memory” could continue to come into the picture, so ultimately this is a simple “fade the rally” type of scenario.

The alternate scenario is that we simply break through the bottom of the candlestick for the trading session on Thursday, but if it did it is likely that the market could go all the way down to the $9.00 level. The 50-Day EMA is sitting at the $20 level, and we would need to break above there before I could even consider buying Neo. Crypto in general looks horrible right now and Neo is going to get crushed every time it tries to rally.

On the downside, it is likely that we would see this market go all the way down to the $5.00 level on a breakdown, with the $7.50 level possibly offering a little bit of support. That would be psychological at best, so it is hard to imagine that it would hold for anything more than a short-term bounce. Once we break through there, I anticipate that even more money would go flowing to the downside. Bitcoin has broken through the $30,000 level, although it is trying to stabilize. If we were to break down below the $25,00 level, then Neo will get the brunt of selling as well due to the fact that it is such a small market.