Hourly chart of the GBP/USD pair
After a slight correction, the GBP/USD resumed its upward movement on Monday. Thus, the pound/dollar pair is still facing an upward trend, therefore long positions remain a priority. Unfortunately, buy signals are not often generated lately. This is because the nature of the current upward movement is not entirely standard. Recently, the price has often been generating false signals, but a strong upward trend remains. Thus, it is often impossible to open trading positions for the pound. However, it was still possible to do this on Monday, since the MACD indicator came close to the zero level during the day, around which it turned upward, forming a buy signal. This signal is circled in the chart. Novice traders could open long positions at 1.4024, so they are currently in profit of about 60 points. This is a great result. You can close this position right now, as the profit level is quite good. You can wait for the MACD indicator to turn down.
No major reports released in the UK and the US on Monday. Not a single important event that could provoke an upward movement. However, the markets do not need any news or data to buy the pound in recent months. We have already repeatedly said that the fundamental and macroeconomic backgrounds do not affect the pair's movements in any way. The speculative growth continues. This fact must be taken into account when analyzing the currency pair. This factor explains the frequent formation of false signals and ignorance of macroeconomic reports.
A fairly important indicator of the unemployment rate will be released in the UK on Tuesday, as well as less important reports on claims for unemployment benefits and wages. However, we believe that these reports will be ignored. Thus, the nature of the pair's movement will most likely remain the same on Tuesday. We still recommend that you pay more attention to technical factors than others. Also, the pair may be strongly influenced by the news of the approval by the US Congress of a new stimulus package worth 1.9 trillion dollars. However, it is impossible to predict when such news will go to the media.
Possible scenarios on February 23:
1) Long positions are relevant since a new upward trend line has formed. Thus, novice traders are advised to wait for a downward correction and a buy signal in the form of an upward reversal of the MACD indicator or a price rebound from the trend line. The targets in this case will be located at a distance of 50-60 points from the entry point.
2) Short positions have lost their relevance again, therefore, in order to be able to consider them, you need to wait for the price to overcome the upward trend line. Even if it happens tomorrow, it is unlikely that the pound will lose much after this event. At the moment, the price and the trend line are separated by about 180 points.
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.