Hourly chart of the GBP/USD pair
The GBP/USD pair corrected quite strongly towards the upper border of the descending channel last Friday, January 8. The price rebound from this line provoked the return of the downward movement. Unfortunately, not as strong as we would like. But in general, the entire trend (if you can call it a trend) that began on January 4 was very weak. But novice traders received two strong sell signals at once, which could and should have been worked out. First, the price rebounded off the channel's limit. Secondly, the MACD indicator turned down. Both signals were strong, so the GBP/USD pair could be sold. You could make 20 points on this signal if you closed deals on Friday evening. However, there was no signal to cancel the downward movement, thus, beginners could leave open sell orders, not forgetting to place a protective Stop Loss order. It is extremely difficult to predict what will happen in the upcoming week. Despite the fact that the pair was in a downward movement for a whole week, it was able to move away from the highs by 140 points in total. In fact, quotes continue to be around 2.5-year highs. Getting the price to settle above the downward trend will break the current downward trend.
Fundamentally, everything remains difficult for the British pound. However, the market does not take the complication into account, therefore, everything remains good for the pound. The pound has gained 21 cents in the past nine months, often ignoring the weak fundamental background from the UK. Even now, when it would seem that a trade agreement with the EU has been signed, the background remains negative. The British economy will still suffer losses in the fourth and first quarters. The new, third lockdown will also have a negative impact on the economy. And in 2021, the country may also face the demarche of Scotland, which has been furiously wanting to leave the United Kingdom for two years.
No major UK and US releases scheduled for Monday, January 11. The political situation in America has calmed down a bit, although after what happened in Washington, in the Capitol, Donald Trump again risks being impeached. At least ten days are left until the day of Joe Biden's inauguration. However, traders are not interested in this, and there are no reports from the UK, except for epidemiological ones. However, the British currency is calmly reacting to new anti-records for the coronavirus disease.
Possible scenarios for January 11:
1) Buy orders have lost their relevance, since there is a downward trend and a descending channel has appeared. Thus, in order to be able to consider long positions, you should wait until the pair's quotes have settled above the descending channel. In this case, long positions can be opened with targets at 1.3675 and 1.3718 (to be revised in the morning). However, this scenario is not expected until Monday morning.
2) Sell positions are relevant at this time. Beginners can remain in shorts from last Friday, when two strong signals were created. The targets are 1.3518 and 1.3475. In principle, it is logical to expect the quote to fall to the lower border of the channel, but it is far from a fact that the bears will be able to surpass the 1.3541 level, from which the price rebounded five times already. For new shorts on the pair, you need to wait for the MACD indicator to discharge and a new fall.
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.
