Hourly chart of the GBP/USD pair
An upward correction began for the GBP/USD pair last night, as part of a new downward trend that formed yesterday, when the price settled below the upward trend line (now marked with a dotted line). Thus, at this time, novice traders are advised to trade short. Therefore, you need to wait for a new sell signal from MACD. This indicator has already discharged to almost zero level, therefore it can create a relatively strong signal. Let us also recall that the pound/dollar pair rebounded off the 1.3618 level twice, which suggests that even within the "swing", the downward movement will continue for another 150 points. There is no descending trend line or channel at this time, so beginners will have to trade on MACD signals. We also remind you that the New Year's week is in full swing and trading can be much more non-standard than usual. For now, though, the pound is trading in a clear manner (unlike the euro).
The macroeconomic calendar for Tuesday does not include any important reports or events. As we said, there won't be any important data during the holiday season. Yesterday it became known that the European Council approved the temporary application of the deal with the UK for a period of two months. This means that before February 28, the European Parliament must now ratify the trade deal with London for it to fully enter into force. In practice, this deal will work in full force from January 1. This is a simple formality. There is little doubt that the European Parliament will ratify the free trade agreement. The same applies to the British Parliament, which must urgently meet tomorrow and also ratify the agreement. Thus, in fact, there are no longer any obstacles in the way of London and Brussels. There are pure formalities left that do not play a special role for the foreign exchange market. This is news from the "something to read" category. They have no effect on the pound's movement. And there is no other news now. And they are unlikely to be this week.
Possible scenarios on December 29:
1) Buy orders have lost their relevance, since the price settled below the trend line. Thus, the bulls have released the initiative and now they need to wait for a new upward trend in order to be able to trade up. Such a trend is unlikely to appear the next day.
2) Sell positions are more relevant now. The pair corrected last night and is preparing to fall. Thus, novice traders can only wait for a new sell signal from MACD and open new short positions while aiming for support levels of 1.3392 and 1.3337.
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.