Hourly chart of the GBP/USD pair
While the EUR/USD currency pair moved from side to side before the results of the Federal Reserve meeting were announced, following them, the GBP/USD pair stuck to its routine. Since the quotes still got out of the downward channel, the trend changed to an upward one. In our previous article on the pound (the day before yesterday), we advised you to buy on a signal from the MACD. This signal could bring about 80 points of profit to novice traders (opening on December 15 at 13-14 hours). Further, despite forming a new upward trend line, the MACD indicator no longer produced strong buy signals, although the upward movement continued. The upward trend line supports those who are trading up now, and the volatility of the pair was quite low today (about 120 points), although it is better to say that there were no sharp movements, and the volatility was still sufficient. So now novice traders can track new buy signals from the MACD indicator. And this indicator has almost discharged to the zero level, which means that in the near future it may produce a buy signal. Also, another signal is when the price rebounds from the rising trend line.
The British pound continues to rise no matter what. Everyone is so tired of the topic of negotiations on a trade deal between the UK and the European Union that they don't even want to think about it. All the same, there has been no progress. And the pound is still growing, despite all the negativity on this topic. A rather important inflation report was also published in the UK today, showing a decline to 0.3% y/y in November. This is certainly very bad for the British economy, but the pound doesn't care. It grew in the morning when this report came out. The UK Services PMI slightly rose from November, but still remained below 50.0. US retail sales fell by 1.1% in November, which is much worse than expected, and PMIs in the services and manufacturing sectors were neutral. But the dollar was still appreciating in the afternoon.
The Bank of England will hold its final meeting for the year on Thursday, which promises to be completely passable. Markets do not expect the UK central bank to cut its key rate. Most likely, it will save this powerful tool for stimulating monetary policy for the most extreme case. Also, no one expects that the asset buyback program will be expanded (also an incentive step), as it was increased at the last meeting. In general, novice traders should pay more attention now to technical analysis, since the entire foundation is now being ignored.
Possible scenarios for December 17:
1) A new upward trend with a trend line has appeared. So now novice traders are advised to wait for a new buy signal from the MACD with the targets at 1.3587 and 1.3709. A rebound from the trend line can also be regarded as a buy signal.
2) Selling, from our point of view, is not advisable right now, since there is an upward trend line. Therefore, sellers need to wait until they manage to surpass this line and only after that should they start trading down while aiming for 1.3337 and 1.3215 (they can be corrected after the signal is generated).
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.