Hourly chart of the GBP/USD pair
The GBP/USD pair continued to move down on Monday, January 18, which eventually made it possible to form a new downward channel. Thus, we now have a downtrend at our disposal again, therefore you are advised to trade for a fall. If the current trend continues for at least a couple of days, then at least a pair of sell signals will be created. At the moment, the price bounced off the lower border of this channel and began to correct, which is very helpful. Thus, a rebound from the upper border of the channel can provoke a resumption of downward movement. But the rebound must be clear and accurate. The same applies to a possible sell signal from the MACD indicator. At the moment, it has almost discharged to the zero level, which means that in the near future it may create a new sell signal. Of course, it will be difficult to track this signal at night, but this is the foreign exchange market. It is open around the clock and signals are generated around the clock. A new upward trend may appear if the pair settles above the downward trend channel.
In the previous review for the pound, we suggested considering trading down, but strong signals were not created today. The MACD indicator turned up twice, but did so at the lowest possible positions, which already indicated a downward trend.
Fundamentally, nothing changes for the British pound. Topic of the news remains the same. Nothing at all from the UK, except for news regarding the epidemic, quarantine and vaccination. The pound/dollar pair continues to ignore the fundamental background when it is there, or trade according to its own rules when it is not there. At least traders have a descending channel at their disposal. In general, now is not the best time to work with the pair.
Nothing interesting in America or the EU on Tuesday, January 18. Therefore, we advise you to focus on the technical picture and track new signals. Trying to analyze the fundamental background doesn't make much sense right now. First you need to wait for the markets to start reacting to it again.
Possible scenarios for January 19:
1) Buy orders are no longer relevant again, as a new downward channel has been formed. Thus, in order to be able to trade bullish, you are advised to wait until the quotes settle above this channel. The nearest targets (to be specified Tuesday morning) are resistance levels of 1.3663 and 1.3700.
2) You are advised to consider sell positions again. In the next few hours, a new sell signal may appear, which can be worked out with targets at the support levels of 1.3537 and 1.3491. But in general, it is still worth remembering that in the long term, the pound/dollar pair will continue to move erratically. Therefore, the pair can now easily return to the 1.3700 level.
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.
