The hourly chart of the GBP/USD pair.
For the GBP/USD currency pair, trading during the day ending at this time was quite difficult. If the euro currency has clearly been corrected within the new downward trend and is also clearly trying to resume its downward movement, the pound sterling was trading in different directions during the day. Moreover, there is no clear trend for the pound/dollar pair at this time. The upward trend line is quite formal, as the price has moved very far away from it. Now, correcting for the third day in a row, it has not yet been able to reach it. Thus, formally, novice traders can expect a price rebound from this line, however, we would recommend counting on a breakout. If a rebound is made, long positions can still be considered. Also today, novice traders could open longs on a signal from the MACD, however, this had to be done in small lots, since the upward trend is ambiguous now.
The fundamental background for the British currency remains an extremely important factor, although it does not always have any impact on trading. The topic of Brexit is inexhaustible and does not want to end. However, there hasn’t been much news on this topic recently. For the most part, they concerned mutual accusations from London and Brussels about their unwillingness to concede in negotiations on a trade agreement. Such stubbornness on both sides leads to a drop in the chances of reaching an agreement to almost zero, which is primarily not beneficial for Britain and its pound. However, it is the pound that has become more expensive in recent days and even weeks. We believe that this is an illogical behavior of traders and the pound will resume its downward trend in the near future. As for today’s macroeconomic reports, the statistics from the UK turned out to be quite strong and interesting. For example, retail sales for September exceeded forecasts and amounted to +4.7% in annual terms. The index of business activity in the service sector fell quite seriously, however, it still amounted to 52.3 points. The index of business activity in the manufacturing sector also declined, however, it exceeded forecasts and amounted to 53.3 points. Thus, in general, you can even call this statistics package quite good. However, the pound tried several times to start a new round of upward movement, however, it still fell most of the day. We believe that the fall in the pound is now justified by the fundamental background.
As of October 23, the following scenarios are possible:
1) We still recommend buying the pound/dollar pair, as the upward trend is still maintained. However, we do not recommend that novice traders do this with large lots since from our point of view, the upward trend will be canceled in the near future. However, an eloquent rebound from the trend line will allow you to open long positions with targets of 1.3100 and 1.3129.
2) Sales, from our point of view, are now much more appropriate, however, you should not rush to open them until the price is fixed below the ascending trend line. In this case, the targets will be the support level of 1.2969 and 1.2860. At the same time, for the pound, it may be better to wait until Monday to assess the situation in a new way, since today’s trading was extremely difficult and ambiguous.
What’s on the chart:
Price support and resistance levels – target levels when opening purchases or sales. You can place Take Profit levels near them.
Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.
Up/down arrows – show when you reach or overcome which obstacles you should trade up or down.
MACD indicator – a histogram and a signal line, the intersection of which is a signal to enter the market. It is recommended to use it in combination with trend lines(channels, trend lines).
Important speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market to avoid a sharp reversal of the price against the previous movement.
Beginners in the Forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management is the key to success in trading over a long period.