Hourly chart of the GBP/USD pair
The GBP/USD pair traded very similarly to the euro/dollar pair on Tuesday. A sell signal also appeared at night, which we recommended novice traders to work out. Just like in the EUR/USD pair, the price made an upward spurt in the morning, which violated the night signal. However, in the pound's case, novice traders could even get out of the sale with minimal profit (about 10 points). A little later, a new sell signal from MACD was generated (circled in the chart), which we also recommended to work out in the morning. Those traders who entered new short positions are now in profit by around 60 points. Again, beginners can decide for themselves whether to close trades with the current profit level or wait for an even greater decline. We would recommend leaving the market with a profit of 60 points, which is very good. Volatility has dropped today, so it is possible that the price will spend some time (especially at night) in a correction. But you can also rely on the MACD indicator: if it does not turn down in the coming hours, then the downward movement may continue until the morning. In this case - Stop Loss, Take Profit and you can go to bed.
The pound fell quite naturally on Tuesday, although it is difficult to find specific reasons again. On the one hand, the British GDP, which was published this morning, turned out to be higher than forecasts, which could have caused the pound to slightly rise, but the US published a strong report in the afternoon - on the American GDP, therefore the dollar's growth in the afternoon is logical. And in general, the British pound has had a reason to fall since a long time ago, due to the ongoing negotiations on a Brexit trade deal between the UK and the EU. According to the latest data, the parties continue to discuss the deal, and, in particular, the issue of fishing, which is most acute. However, what about the deadlines? Many experts are inclined to believe that the deal can be ratified "retroactively", because there is no other way out but to declare the failure of the negotiations. And no one needs failure.
No major reports scheduled for release in the UK on Wednesday, so the focus is on macroeconomic reports from the US. We believe that traders will only react to these reports if the forecast and actual values differ greatly. In addition, news of progress or failure in the London-Brussels negotiations may trigger a strong market reaction. If negotiations are still ongoing, then there are still chances of reaching an agreement. And it is not on the agenda as to how the MPs would ratify this final agreement.
Possible scenarios for December 23:
1) The upward trend is temporarily canceled since the price has settled below the upward trend line. So in order for novice traders to consider trading up again, they need to wait for the end of the downward trend, that is, the price should settle above the downward trend line. Until then, it is not recommended to buy the pound.
2) Sales, from our point of view, are practical right now, since a new trend line has formed. So now you can keep short positions open while aiming for 1.3266 or slightly below until the MACD indicator turns up. You can close deals right now and be content with a profit of around 60 points. You are advised to open new short positions on a new sell signal, not earlier than tomorrow morning.
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.
