Hourly chart of the GBP/USD pair
The GBP/USD pair continued the upward movement on Tuesday, January 12, which began a day earlier after the price rebounded from the lower border of the descending channel. By the end of the trading day, the pair's quotes rose to the upper border of the same channel and settled above it. The trend changed to an upward one and even a buy signal appeared, but it is weak, therefore, you shouldn't work it out. It is considered weak because when it appeared the pair had already grown by around 150 points. Accordingly, there aren't many chances for the pair to move by another 50-100 points without a downward correction. Therefore, we recommend waiting for the downward correction, afterwards a buy signal will appear. But if novice traders have opened buy deals on this signal, then that means they are now in profit by around 30 points, which is not bad. So far, it looks like a long-term upward trend will resume. So now the pound/dollar pair raises a lot of questions, and even more questions are raised about the validity of the British pound's succeeding growth. But you have to choose from two options: either do not trade at all, or trade in the state of affairs that is.
Fundamentally, a rather important and unexpected event took place for the pound on Tuesday. Bank of England Governor Andrew Bailey delivered a speech, and one of his theses was "with negative rates there will be many difficulties and problems." This came across as an implication that the Bank of England will not lower the rate in the near future. That is, it will not soften the monetary policy and so market participants immediately bought the pound. But if this is the only reason for buying the pound, then a new downward movement may begin tomorrow. From our point of view, the foundation is not on the pound's side.
No major UK events scheduled for Wednesday, January 13, but then again Bailey spoke on Tuesday. Therefore, beginners will have to trade based solely on technical factors. The only thing is US inflation. It can affect the course of trading. But the chances of this, again, are few.
Possible scenarios for January 13:
1) Buy orders became relevant again, since the pair's quotes left the descending channel. Thus, you are now advised to consider long positions, but after a downward correction cycle, the indicator discharges to zero and a new buy signal is created. Aim for the resistance level at 1.3682 (to be revised tomorrow morning).
2) Sell positions have lost their relevance. Now you need to wait for a new downward trend or the end of the current upward trend. You can try to play on the correction, which should start in the near future, but it is always risky to trade against the trend. And the MACD indicator may not discharge in parallel with the decline, thereby creating a false sell signal.
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.