Hourly chart of the GBP/USD pair
The GBP/USD pair continued its downward movement until the evening on Thursday, January 28. During such movement, there was a pullback to the upside (minimal), but the indicator still managed to turn upward and thus form a buy signal. However, in the last review, we advised you to wait until morning and monitor new buy signals afterwards. Thus, we had to pass the night signal (especially since it was formed at night anyway), but the next signal should be processed. First, it was formed in the morning. Secondly, the price previously rebounded off the upward trend line and this rebound could be considered a buy signal. Thirdly, the MACD indicator turned up again, so it was necessary to open long positions from the 1.3669 level. We named the levels 1.3744 and 1.3780 as targets, the first of which has been successfully reached at a point. Thus, long positions can be closed and we could wait until Friday morning. The 1.3744 level is an important level for the pair at the moment. If the price overcomes it, then the upward movement may continue, which can be rejected. Recently, however, the pair has been struggling to renew its highs, so a downward pullback may also follow. In any case, the upward trend is currently present and you need to wait for new buy signals
No macroeconomic report from the UK on Thursday, all the news were epidemiological. Thus, market participants could only focus on US reports. We have already spoken about the GDP report, it turned out to be weaker than the forecast values. A report on claims for unemployment benefits was also published. And after several weeks of weak values, it finally turned out to be strong. The number of new primary applications was 847,000, and the total number of secondary applications decreased from 4.974 million to 4.771 million. However, the GDP report was still more important, plus there was a very strong technical buy signal. Therefore, the pair's growth was absolutely reasonable.
The macroeconomic background on Friday will be reduced to statistics from overseas, since important reports will not be available. We have data on personal consumption spending, changes in income and spending levels of Americans, and the consumer sentiment index from the University of Michigan. In general, all reports are clearly secondary. Thus, as in the case of the EUR/USD pair, you should focus your attention to technical factors and signals.
Possible scenarios on January 29:
1) Long positions remain relevant as the price continues to be above the trend line. Thus, you should monitor the appearance of buy signals. If the price overcomes the 1.3744 level, it will be a buy signal and you can aim for the resistance level of 1.3800, but it will be formed at night, plus it should be taken into account that the pair has already gone up more than 100 points. In general, this signal can be strong, but it will be difficult to track it. Therefore, at the personal discretion of novice traders. You need to wait for a new round of correction to generate a buy signal from MACD.
2) You should not consider short positions right now, as the upward trend continues for the pound/dollar pair. Thus, you can only open shorts when the price has settled below the rising trend line. The targets in this case can be located near the levels of 1.3600 and 1.3543.
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.
