Hourly chart of the GBP/USD pair
The GBP/USD pair opened Monday with a gap of 150 points to the upside, which immediately confused all the cards for traders. The gap does not happen often in the foreign exchange market, but it does happen. Given this situation, the downward trend line was immediately broken, so novice traders could look for an opportunity to open long positions with targets at 1.3317 and 1.3388, as we suggested in the previous review. Unfortunately, this happened at night, and it was also necessary to open long positions. If traders waited until morning and were considering options for opening long deals, then it would be much better. In any case, even if traders had opened long deals at the very moment when trading had opened, then it would have been at a minimum profit around the 1.3388 level. Further, a downward reversal occurred with a signal from MACD near the upper border of the downward channel. Therefore, novice traders could already open deals here for a decline. In the long term, the price may reach the lower border of the channel, but the upward signal from MACD can be used to leave the market.
Negotiations on the Brexit trade deal is still the main topic for the pound. However, there is simply no fundamentally new information on this topic now. The only thing that both parties were able to agree on was to continue negotiations, although there was no visible progress, and there is still none. However, nothing else is left. There is no sense in ending the negotiations as long as there is at least a faint hope of concluding an agreement. It looks like London and Brussels will try to conclude a trade deal for at least another two weeks.
The UK will release quite important reports on Tuesday: the unemployment rate, applications for unemployment benefits and wages. Unfortunately, most likely, these reports will be ignored, however, they should not be overlooked. More likely, from a technical point of view, we still have a downward movement now, so we are waiting for weaker data than experts predict, so the US dollar will receive support for the market. On the whole, the so-called "high-volatility swing" is still present for the pound/dollar pair. That is, the price jumps up and down to very high values. For example, the last round of the upward movement was 300 points and took exactly one day in time. At the same time, the rising movement may resume, especially if the MACD indicator produces a strong buy signal.
Possible scenarios for December 15:
1) A new short-term downward trend has formed with a descending channel. However, after a fairly strong rise in quotes, the MACD indicator was discharged to the zero level, so there may be another upward spurt. We believe that it is advisable to buy the pair using the MACD signal, aim for 1.3419 and 1.3513.
2) Selling, from our point of view, is more appropriate now, since there is a downward channel, from the upper border of which a rebound has already been made. Thus, the price rebounding from its upper border could be used to sell the pair. For new short positions, you need to wait for a new sell signal from MACD. Aim for support levels 1.3229 and 1.3133.
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.