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Hourly chart of the GBP/USD pair
The GBP/USD pair was more active than the EUR/USD pair on Wednesday. The pair rose to the resistance level of 1.3927 in the early morning, rebounded from it and turned down. The pair's upward movement in the morning was accompanied by an upward reversal of the MACD indicator. That is, a buy signal was formally generated. However, we have repeatedly said that when a signal is formed on a strong candlestick, it should be eliminated. Yes, and the MACD indicator did not really run out after a small round of correction. But later the MACD indicator began to slow down its upward movement. The indicator window clearly shows that each bar of the histogram was getting weaker and weaker, and the signal line was getting closer and closer to the histogram. Therefore, a sell signal was clearly brewing, which eventually formed. At this point, it was possible to switch to a lower timeframe and clarify the picture of what is happening on it.
As soon as the sell signal matured on the 1-hour timeframe, two sell signals have already formed on the 5-minute timeframe. The first one could be skipped, since it was the first, but the second one almost perfectly coincided with the signal on the hourly timeframe. Therefore, it was possible to open short positions in this place and at the moment traders are in profit of about 20 points on this signal. Thus, Stop Loss should be moved to breakeven, especially since the results of the Federal Reserve meeting will become known and Chairman Jerome Powell's press conference will begin.
No major report released in the UK on Tuesday, not a single major event. Thus, although the pair did not stand still during the day, there was no fundamental or macroeconomic impact on it. Now the announcement of the results of the two-day Fed meeting will begin, during which traders will find out the central bank's mood, the economic forecast for the coming years and answers to all questions of interest at Powell's press conference.
The main event on Thursday will undoubtedly be the Bank of England meeting and the announcement of its results. As in the case of the Fed, we do not expect any changes in the monetary policy of the British central bank, so the most interesting event will be the summary on monetary policy, as well as speeches by representatives of the monetary committee Jon Cunliffe and Andy Haldane. Naturally, the pound/dollar pair's movement will largely depend on whether economists report anything important to the markets. Another speech from Powell in the evening, so the calendar of events for tomorrow is clearly full of various kinds of speeches. Therefore, you need to be very careful with trading.
You can consider both buy and sell signals since there is no trend for the pound/dollar pair. However, firstly, the technical picture may dramatically change after today's Fed meeting, and secondly, tomorrow's speeches and events can greatly affect the pair's movement as well as the technical picture. Thus, firstly, you should leave the market during all strong fundamental events, or move Stop Loss to breakeven. Secondly, the 1.3862 level. Rebounds can be used as signals. Third, there are MACD reversals in both directions. In case of any incomprehensible situation, we are looking for confirmation on the 5-minute timeframe or we do not risk and do not enter the market.
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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