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1-hour chart of GBP/USD
On Thursday, January 14, GBP/USD made three attempts to resume the uptrend after a correction to 1.3618. As a result, GBP/USD rebounded three times off this level. The MACD indicator formed three buy signals, each of them was strong. All signals are pinpointed by circles in the picture. Despite their strength, GBP/USD was trading rather sideways than with a clear-cut trend. Thus, the first buy signal could have brought beginners a 12-pips loss. The second one could have brought a 19-pips loss. The third signal has gained a 38-pips profit. In other words, if beginners opened all three trades, now they have gained a minor profit. The final buy signal has not been cancelled yet as the indicator still points upwards. However, the level of 1.3702 is being worked upon now with a higher high but a failed attempt to continue the upward move. This prompts an idea about a possible new downward correction. On the whole, I expect a further upward move, but I don't rule out a correctional decline at night. Nevertheless, I would recommend keeping long positions until the MACD indicator reverses downwards.
Fundamentally, the sterling is still not influenced by any catalysts. The economic calendar is nearly empty for the UK. The US released a series of economic reports but all of them are of little importance to market participants. Let me warn beginners that the fundamental background and macroeconomic data have been recently neglected by the market. So, technical analysis is of major importance now. Interestingly, political news makes no difference to market sentiment. Read about what's going on in the US just to be aware of the latest developments.
Tomorrow, on January 15, the UK is due release some interesting reports. So is the US. The question is whether market participants will pay any attention to them. If no, GBP/USD will continue moving following its logic. Nevertheless, don't miss the UK GDP data for November. The UK national output is expected to log a 4.6% contraction that will confirm grave headwinds in the British economy. Other economic data will be less important, though it makes sense to get to know data on the UK industrial production and the US retail sales.
The following scenarios are possible on January 15
1)Long positions on GBP/USD are still gainful at present because the price has left the downward channel. Thus, it is recommended to keep long positions with targets at 1.3737 and 1.3775 until MACD reverses downwards. Besides, beginners could try close long positions right now without extending positions overnight. New long positions can be opened after the MAD indicator generates a new buy signal.
2)Selling the pair is getting a bad idea. Now it would be better to wait for a new bearish move or a completion of the current uptrend to trade the pair downwards again. The situation will hardly change until the morning. The third bounce off 1.3702 could trigger a downward move, but it would be trade against the trend.
What's on the chart:
Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.
Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.
Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.
MACD indicator (10,20,3) - a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend lines (channels, trend lines).
Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners in the forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
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