Hourly chart of the GBP/USD pair
The GBP/USD pair also initially fell and then rose at the beginning of the new working week. The difference with the EUR/USD pair lies in volatility. Traditionally, the pound/dollar pair is much more volatile, so the pound initially fell by 330 points, and then rose by 310. Such volatility is very dangerous for all traders, especially for beginners. If you do not set Stop Loss in such conditions, you can go bankrupt very quickly. Thus, we constantly advise you to first of all trade in a calm market, and open deals only when the signals are strong and there is a clear trend. Unfortunately, this cannot be said at the moment. In the morning review, we did not recommend trading upward, and we recommended closing sales if the MACD indicator turns up. And so, up to the moment when the MACD turned up, novice traders could get several tens of points of profit. In the current circumstances, we would recommend looking for new sell signals, as it is difficult to imagine, on the basis of which the pound can continue rising, which started in the afternoon.
The pound fell quite naturally in the morning and night. However, it sharply began to grow in the afternoon, which raises big questions. However, this is exactly how the pound has been traded in recent months - with big questions about justification. Therefore, novice traders can themselves conclude how pleasant the market is right now. Trade negotiations had once again ended in nothing and no progress had been made. And this factor was also supposed to put pressure on the pound. But it is an open question as to why the pound grew in the afternoon.
The markets will focus on news of a new strain of coronavirus, and possibly new information on the progress of negotiations between London and Brussels on a trade deal. The closer the date of December 31, when the transition period will be officially completed, the closer is the denouement of this whole epic. The only question is, what will it be? The pound may continue to trade in a highly volatile mode. Also, do not forget that Christmas and New Year holidays are approaching. Sometimes there is a drop in volatility during these periods, and sometimes, on the contrary, its growth. Therefore, this is another factor that can influence the pair's movement and confuse the technical picture.
Possible scenarios for December 22:
1) The upward trend is temporarily canceled since the price has settled below the upward trend line. So now, in order for novice traders to consider trading up again, they need to wait for the downward trend to end or a new upward trend to appear. Until then, it is not recommended to buy the pound.
2) Selling, from our point of view, is now advisable, since the price has settled below the trend line. So now you can open short positions while aiming for support levels of 1.3409, 1.3346 and 1.3300. To do this, you need to wait for a new sell signal from MACD.
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.
