Stay 
Trading Conditions
Products
Tools
Hourly chart of the GBP/USD pair
The GBP/USD pair still tried to overcome the 1.3744 level, which is the past local and 2.5-year high, but failed again. Thus, a rebound took place from this level and the price began a round of downward correction within an upward trend, which is still evidenced by an upward trend line. In our last review, we recommended waiting for the MACD indicator to discharge and after that - for a new buy signal. No signal generated during the day. In order to consider trading down, it was necessary to wait for the price to settle below the upward trend line, which also did not happen. Therefore, novice traders were deprived of the opportunity to trade the pound/dollar pair today. At the moment, the MACD indicator is sufficiently discharged and is preparing to generate a buy signal. However, take note of the reaction to the Federal Reserve meeting. We would recommend not to take risks and exit the market, rather than open new positions. Your best bet would be to wait until tomorrow morning and re-evaluate the situation when the markets calm down.
No macroeconomic report released on Wednesday in the UK, and there was little news. At the very least, we cannot link today's fall in the British currency with some fundamental event. Of course, the markets could only react in this way to the future announcement of the results of the meeting. It often happens, however, what does the strengthening of the US dollar mean then? Were the markets waiting for Jerome Powell to announce a cut in the quantitative stimulus program? However, the crisis is still ongoing, the pandemic has not been defeated. The US economy needs support, not tight regulation. Therefore, we believe that nothing like this will happen in the evening. If Powell is overly optimistic, it may also support demand for the dollar. However, we recommend that novice traders do not guess what might happen, but trade according to the information already received.
The macroeconomic background on Thursday will be reduced to statistics from overseas, where the most important report will be the Gross Domestic Product for the fourth quarter. Thus, if the forecasted value (+ 4.2% q/q) is exceeded, it will significantly increase the chances of a rise in the dollar (the fall of the pound/dollar pair) tomorrow. And vice versa. Nothing more interesting is planned for tomorrow.
Possible scenarios on January 28:
1) Buy orders remain relevant as the price continues to be above the trend line. Thus, you are advised to monitor the formation of buy signals. The pair has already sufficiently corrected to the downside, so we are waiting for the MACD indicator to reverse upwards and in this case you can open long positions while aiming for 1.3744 and 1.3780. However, if you are to open these deals, do so only if the Fed does not accept and will not make any important decisions and statements. Then there will be no market reaction and a buy signal will be generated in a calm atmosphere. In general, a signal may be formed in the coming hours, but opening it is at the peril and risk of novice traders.
2) You should not consider selling right now, as the upward trend continues for the pound/dollar pair. Thus, you are advised to open short positions when the price has finally settled below the rising trend line. The targets in this case can be located near the 1.3560 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.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
