Hourly chart of the GBP/USD pair
The GBP/USD pair only moved down in the morning of Monday, January 25. The upward movement continued in the evening, which began on Friday and so novice traders had every right to work it out. Recall that the MACD buy signal was formed on Friday and it was strong, as the indicator turned up from the area below the zero level. Thus, long positions should have been open until the indicator turned back down. This trade could eventually bring up to 30 points. Not bad, considering that trading was not the most volatile on Monday. But it was not recommended to work out the spiral of the downward movement since the upward trend is still present, which is eloquently signaled by the upward trend line. So now you should wait for a new buy signal, which can form the MACD indicator or a trend line, from which a rebound will occur.
No important reports from the UK on Monday, and Bank of England Governor Andrew Bailey did not mention anything particularly important or interesting in his speech. Traders already know all the most important and interesting things. So this information has no effect on the pound. In short, there is no fundamental reason for the pound to be at such high levels. The pound is overbought and remains very high against the dollar, while ignoring all the important news and statistics.
Several interesting reports will be published in the UK on Tuesday, but one can reasonably ask the question: when was the last time the pound reacted to data on wages or unemployment? Of course, this is very interesting data, which will most likely continue to indicate a worsening situation in Great Britain, but does anyone really expect the pound to fall tomorrow if these reports turn out to be weak, as forecasts suggest? The pound may simply fall as part of the next round of correction in the upward trend. However, it is unlikely to be below the upward trend line. Thus, we personally believe that everything will depend on technique and technical signals. In any case, in the morning you will need to conduct a new analysis and find out what has changed overnight.
Possible scenarios on January 26:
1) Long positions remain relevant since the price is still above the trend line. Thus, you are advised to monitor the formation of buy signals. In case the MACD indicator reverses to the upside (it is already sufficiently discharged) or a rebound from the trend line occurs, then it is recommended to open long positions while aiming for 1.3731.
2) It is not recommended to consider short positions now, since there is an upward trend. Thus, you should only open short positions when the price has settled below the trend line. The targets in this case can be located around 1.3583 and 1.3531.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
*Prezentowana analiza rynku ma charakter informacyjny i nie jest przewodnikiem po transakcji.
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