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The GBP/USD pair continued its downward movement on Thursday, which was technically justified. The British pound has been in decline for a week and during this time has formed a clear trend supported by a trend line. Therefore, the pound had all the grounds for a decline on Thursday. There were no macroeconomic or fundamental reasons, but, as those traders who read us regularly may understand, market movements are not always about logic and consistency. There were no significant events in either the UK or the US yesterday, and the European Central Bank meeting had no relevance to the British currency. Moreover, the results of the ECB's meeting cannot be considered dovish, and the fall of both the euro and the pound began in the morning rather than after the results were announced. Thus, both the euro and the pound showed purely technical movements within their trends.
On the 5-minute timeframe, two sell trading signals were formed on Thursday. During the European trading session, the price bounced off the area of 1.3380-1.3386, and during the American session, it breached the area of 1.3319-1.3331. Therefore, novice traders could have opened a short position yesterday and earned about 60 pips by the end of the day.
On the hourly timeframe, the GBP/USD pair continues its downward trend. After three weeks of growth, a correction was necessary. How long the British pound will continue to fall is hard to say, but traders currently have a good reference point in the form of a trend line. Thus, until the price consolidates above this line, the downward trend remains intact.
On Friday, novice traders can open new short positions if the price bounces from the area of 1.3319-1.3331, targeting 1.3259-1.3267. A consolidation above the area of 1.3319-1.3331 will allow for opening long positions with a target of 1.3380-1.3386.
On the 5-minute timeframe, levels to consider for trading include 1.3096-1.3107, 1.3175-1.3180, 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3456-1.3476, 1.3587-1.3598, 1.3631-1.3641, and 1.3695. On Friday, business activity indexes for the services and manufacturing sectors for July will be published in the UK and the US. This data is quite important but could easily be ignored by the market, which is currently focusing more on technical factors. A retail sales report is also scheduled to be released in Britain, and the reaction to it may correspond to the reaction to the business activity indexes.
Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.
Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.
The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.
Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.
Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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