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Hourly chart of the GBP/USD pair
The GBP/USD pair spent the second day of the trading week in an equal up and down movements. First, the pair went down by around 90 points, and then up the same way. Thus, yesterday's evening buy signal was canceled as the upward movement immediately stopped. In yesterday's review, we also advised trading from the 1.3862 level. Two signals were formed from this level during the day. The first one - for selling - made it possible to earn around 50 points of profit (if the deals were closed at the lowest point), however, we advised you to Take Profit at the level of 40-50 points, so novice traders could earn around 40 points. Furthermore, a buy signal was formed, so this level was surpassed from the bottom up and at the moment this deal is worth around 23 points. Novice traders can decide for themselves whether to leave this deal open overnight (with Stop Loss set at breakeven, of course) or close it now at a profit of 23 points. One way or another, newcomers could earn about 50-60 points on the pound/dollar pair today. On the whole, the horizontal trend is still present for the pair. At the moment, there is no trend line or channel, which means that you can trade equally in both directions.
No major reports from the UK on Tuesday. Therefore, today's movement was not associated with data from the UK. In the same way, it was not connected with US reports, which turned out to be very weak. Although the dollar started falling in the afternoon, it began much earlier than when the US reports were released. Also, the pair's movement was not associated with a change in the yield on US government bonds - this indicator has not changed during the day.
The main event on Wednesday will undoubtedly be the Federal Reserve meeting and the announcement of its results. We believe that the most important information will directly come from Fed Chairman Jerome Powell. However, in any case, you should be very careful in the evening, as sharp price reversals are possible. In general, novice traders can leave the market before these events start. Or place Stop Loss orders, as no one can predict what Powell will tell the markets.
Possible scenarios:
1) Long positions are now valid since the downward trend has been canceled. Novice traders already have the opportunity to open longs, since the price surpassed the 1.3862 level. So now you can keep these positions open, or you can close them and be content with a small profit. You can open new longs using a new signal from the 1.3862 level (a rebound, for example) or by an upward reversal of the MACD indicator.
2) Short positions are as relevant as longs, because the pair is inside a fairly wide horizontal channel. In case the price clearly settles below the 1.3862 level, then we would advise you to open shorts with a target located 40-50 points below. In this case, we place Stop Loss above the 1.3862 level. When passing 15-20 points in the right direction, set Stop Loss to breakeven. Also, you can open shorts using a sell signal from MACD. But it's better closer to morning, not at night.
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.
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