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The GBP/USD pair showed its first relatively strong movement of the week on Wednesday. "Strong" can be called that with some stretch, but a movement of even 50 pips is considered volatile this week. The British pound fell to 1.3587 under pressure from the U.S. durable goods orders report, yet it maintains an upward trend, as evidenced by the ascending channel. There were no reports published in the UK this week, and none are scheduled for Thursday, leaving traders waiting until Friday. Tomorrow, the Federal Reserve Chair Kevin Warsh will speak in the U.S., and the annual Non-Farm Payrolls report will be released. While it may not be expected that Warsh will have any dramatic statements regarding monetary policy, the Non-Farm Payrolls report is anticipated to yield a significant figure that may surprise many traders.
On the 5-minute timeframe, two sell signals were generated on Wednesday. The pound initially broke through the 1.3631-1.3641 area and then bounced back down. The signals mirrored each other, allowing novice traders to open one sell position. During the U.S. trading session, the price hit the nearest target in the 1.3587-1.3598 area.
On the hourly timeframe, the GBP/USD pair continues to maintain an upward trend. In our view, the British pound should continue to rise even if local factors do not support it. On the weekly timeframe, the move from the lower boundary of the sideways channel to the upper boundary continues, and it is not yet complete. Market confidence in a Fed rate hike in September is visibly fading, as all recent macroeconomic data and events have pressured the dollar. Only a close below the ascending channel on the hourly timeframe would suggest a potential decline in the pair for technical reasons.
On Thursday, novice traders may consider opening short positions if a close occurs below the 1.3587-1.3598 area, targeting 1.3456-1.3476. Long positions can be opened with targets of 1.3631-1.3641 and 1.3695 if the price bounces from the 1.3587-1.3598 area.
On the 5-minute timeframe, trading can currently be conducted at the following levels: 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3456-1.3476, 1.3587-1.3598, 1.3631-1.3641, 1.3695, and 1.3741. On Thursday, there are no significant events or publications planned in the UK, while the U.S. will only release a minor report on durable goods orders. Consequently, volatility in the pair may drop to minimal levels again.
Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.
Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.
The MACD indicator (14,22,3) – histogram and signal line – is a supporting indicator that can also be used as a source of signals.
Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.
Beginners in Forex trading should remember that not every trade can be profitable. Developing a clear strategy and proper money management are essential for long-term trading success.
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