Hourly chart of the GBP/USD pair
The GBP/USD pair continued its movement from last Friday. If the euro/dollar pair continues to move down, which is surprising to us, then the pound/dollar pair is trading differently every day, which is also surprising. Although, if we take today in particular, then the pound/dollar pair was the one that was traded most logically. No important macroeconomic reports for today, no important news either. Thus, a flat is the most appropriate movement for such a day. Unfortunately, the pound rarely pleases traders with the logic of movements. As a result, we have a downward trend signaled by a very formal downward trend line. "Formal" - because it has already been rebuilt three times and with such a movement can be rebuilt three more times. What is the point in it, then, if it is constantly being rebuilt? In addition, we have a kind of triangle, the price exit from which can show in which direction the pair will move in the next trading day. But in general, we continue to insist that the movement is extremely complex and does not yet correlate with the euro/dollar pair, although the factors that influence it seem to be the same. In the last article, we recommended considering only short positions, and even then only if a strong sell signal from MACD is generated. MACD got to the zero level with great difficulty, and only at the end of the trading day. Thus, while there is no reason to open any positions on the pair.
No major reports in the UK and the US on Monday. Bank of England Governor Andrew Bailey delivered a speech, but he did not mention anything important. Bailey said that he sees positive changes in the UK economy, but also urges not to forget all the structural problems. In general, this information had no effect on the pair's movement, and there was simply no other information.
No important events scheduled in the UK and the US, so the idea is that tomorrow the pair will move the same as today. And so we advise novice traders to re-evaluate the situation in the morning and enter the market only if the flat ends. By the way, the triangle that is in the chart and which we talked about above can help determine this moment. Overcoming any of its boundaries can signal the traders' intention to move the pair in that direction.
Possible scenarios on March 9:
1) Long positions are irrelevant now, since there is a downward trend line. Buyers need to wait for the price to settle above this trendline to be able to consider bull trading. Take note that this trend line is rather formal in nature, therefore, you should be careful and not forget about Stop Loss when opening any positions. The price is unlikely to be able to get to the trend line and overcome it on Tuesday.
2) Short positions are relevant as the downward trend continues. Novice traders may consider opening short positions on Tuesday if the price settles below the triangle. Or it will exit through its upper border, and then the MACD indicator will generate a sell signal. Or the price will subsequently rebound off the downward trend line. In each case, Take Profit can be placed 40-50 points below the entry point. Also, do not forget about Stop Loss at breakeven.
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.
