Hourly chart of the GBP/USD pair
The GBP/USD pair corrected by 90 points at the end of this week, afterwards it sharply resumed its upward movement. Unfortunately, it was difficult for beginners to work out all these movements, since there was an almost recoilless upward movement at first, during which practically no new buy signals were formed, then there was a consolidation below the upward trend line, which we said was high. is likely to be false, and a new upward trend line was formed after Friday trading. However, it was created when the upward movement had ended. Therefore, novice traders now have an upward trend at their disposal, but you are advised to trade bullish only if a new buy signal appears: either a rebound from the trend line or from the MACD indicator. At the same time, the pound may start a new round of corrective movement, and you also need to be ready for this. But in any case, breaking the trend line can also be a way to form a sell signal. In general, the pound continues to trade near its 2.5-year highs, so it may update them at any time.
Quite important reports were published in the UK on Friday. The first was in terms of GDP for the fourth quarter of 2020, which caused a lot of discussion among traders. Forecasts have been negative for a long time, and even the head of the Bank of England, Andrew Bailey, said that at best, GDP in the fourth quarter will not change compared to the third. However, in the first assessment, this report turned out to be positive, that is, with an increase of +1.0% q/q. Of course, one should wait for the final assessment and only after should you draw conclusions, however, the first assessment was enough for the pound to rise in price again. The rest of the reports were less important and traders no longer paid any attention to them. Although the report on industrial production could put pressure on the pound, as it turned out to be weaker than forecasted.
There will be no major releases in the UK and America on Monday, February 15. Perhaps the markets will try to win back the failed attempt to impeach Donald Trump, but there is very little hope for this. Markets continue to wait for the US Congress to approve a new stimulus package for the US economy worth $1.9 trillion. And this news may affect the pair's movement (as well as the euro/dollar). For now, you are advised to prioritize technical factors.
Possible scenarios on February 15:
1) You are advised to consider long positions again, since the upward trend line was created. Thus, beginners need to wait for the price to rebound from the trend line or the MACD indicator discharges to the zero level and a new buy signal to form. The targets will be around the levels 1.3882 and 1.3906.
2) Short positions are not relevant at the moment, since an upward trend has been created. However, if the price settles below the trend line, then the downward movement may continue within, at least, a correction. Therefore, in this case, you are advised to open short positions with targets at the support levels of 1.3764 and 1.3744.
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