The GBP/USD pair tested the 1.2611 level for the fifth time in recent weeks and, for the fifth time, failed to overcome it. Note that in the last month, the British pound has been trading predominantly between the levels of 1.2611 and 1.2787, that is, within a sideways channel. Therefore, another rebound from its lower boundary can only lead to a movement towards the upper boundary. The flat trend in the British pound persists.
On Wednesday, circumstances were such that the dollar had little chance of showing growth. Firstly, the notorious level of 1.2611 hindered the strengthening of the U.S. currency. Secondly, the important British inflation report turned out to be higher than forecasted, which triggered a new rise in the British currency. Inflation in December increased by 0.1% annually instead of decreasing by 0.1%. Since inflation did not slow down, the market quite rightly concluded that there is no need to count on a prompt easing of the Bank of England's monetary policy. Consequently, the pound again received fundamental support.
However, the pound remains at too high levels for a long time. We continue to expect a prolonged and significant fall from it. But first, of course, we need to wait for consolidation below the level of 1.2611.
GBP/USD on 5M chartThree trading signals were formed on the 5-minute timeframe on Wednesday, each of which was almost perfect in accuracy. Unlike the euro, the pound did not stand still, so beginner traders could earn well by following our advice. First, a buy signal was formed in the area of 1.2605-1.2611. Just a few hours later, the pair rose to the level of 1.2688 and bounced off it twice, forming two sell signals that duplicated each other. After that, the price went down about 40 pips, but could not return to the area of 1.2605-1.2611. Therefore, the sell trade had to be closed manually closer to the evening. In any case, this trade did not incur a loss, and the first trade made it possible to earn about 50 points.
Trading tips on Thursday:On the hourly timeframe, the GBP/USD pair has finally started a downward movement within the sideways channel of 1.2611-1.2787. The price has bounced off the level of 1.2611 for the fifth consecutive time, so a new wave of growth has begun within the sideways channel, which is clearly visible on the 4-hour timeframe.
On Thursday, the British pound is highly likely to remain within the sideways channel. There will be no significant fundamental and macroeconomic events in the USA or the UK, so it will be very difficult to count on a strong rise or fall.
The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2544, 1.2605-1.2611, 1.2688, 1.2725, 1.2787-1.2791, 1.2848-1.2860, 1.2913, 1.2981-1.2993.
The economic calendar in the UK is empty. In the USA, only secondary reports on unemployment claims, the number of new homes, and the number of building permits received will be released.
Basic trading rules: Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.On an hourly timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.When the price moves in the correct direction by 20 pips after opening a trade, a Stop Loss should be set to break even.How to read charts:Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.
The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.
Important speeches and reports (always noted in the news calendar) can significantly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.
Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.