Hourly chart of the GBP/USD pair
The upward movement continued for the GBP/USD pair last night. A little earlier, the pair's quotes settled above the descending channel, so the downward trend was once again canceled, and the upward one was formed. Therefore, at this time, novice traders are advised to consider trading up again. Beginners could open buy orders upon a signal to overcome the descending channel (circled in red in the chart). Moreover, from the moment it was created, the upward movement was not interrupted for a second, and the MACD indicator made miserable attempts to turn to the downside. Therefore, all this time it was possible to maintain long positions. At this point, the profit would be around 40 points. Moreover, the pound/dollar pair seems to be aiming for the 1.3700 level, which had already been reached three times earlier. Therefore, in some way now you can even try to move away from the usual scheme of opening/closing positions and Take Profit at the 1.3700 level. Of course, such a transaction must be constantly monitored in order to avoid unnecessary losses. But there is a very high probability of going to 1.3700.
The UK will publish its inflation report today, and it will be released early in the morning, in the coming hours. The UK consumer price index is expected to accelerate from 0.3% y/y to 0.5%-0.6% y/y. If the forecast comes true, the pound may receive additional support from the market. Other reports from the UK are less significant. As we have said many times, the foundation and macroeconomics do not have too much influence on the market right now. Therefore, technical factors are more important. We advise you to keep a close eye on them. Especially since there will be around a 12-hour gap between the release of inflation report and the inauguration of Joe Biden. That is, at this time, nothing will affect the pair's movement. We would also like to draw your attention to the fact that the pair cannot constantly work out and bounce off the 1.3700 level. Sooner or later, this level will be overcome. And surpassing this level can indicate that the upward movement will continue. Although, from a fundamental point of view, this option is absolutely illogical and not obvious.
Possible scenarios on January 20:
1) Buy orders became relevant when the pair settled above the descending channel. Thus, you can still buy while aiming for 1.3673 and 1.3700. However, in this case, you need to take precautions, since the price has already gone up about 130 points. Therefore, set Stop Loss. You are advised to open new buy orders based on a new buy signal from MACD, which must be discharged beforehand.
2) Selling has lost its relevance, as this time the pair managed to move away from the 2.5-year highs by only 185 points. Thus, in order to open short positions, you now need to wait for a rebound from the 1.3700 level or another signal of the end of the upward trend. This can take several days.
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.
The material has been provided by InstaForex Company - www.instaforex.com