GBP/USD. January 7th. Results of the day. The pound sterling has balanced losses and no longer has reasons for growth

4-hour timeframe

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The amplitude of the last 5 days (high-low): 89p - 59p - 134p - 192p - 211p.

Average amplitude for the last 5 days: 128p (137p).

The British pound on Monday, January 7, also continues to recover from the failure of January 2. All losses are currently balanced, therefore, in our opinion, the pound sterling will need good reasons and grounds for continued growth. Especially when there is still nothing clear with Brexit and how the UK Parliament will vote on Theresa May's bill. Therefore, we believe that in the area of the current local highs, a downward turn may occur with a decrease at least in the area of the critical line. As for the fundamental background, Friday's reports, by the way, are very important, had almost no impact on the movement of the pair. Most of the reports from the United States were very strong, but instead of another strengthening of the dollar, we saw the growth of the British pound, which could only be due to the need to close the losses from the 2nd. Now that these losses are closed, and there are no new reasons to strengthen the pound, traders can once again move to moderate purchases of the US currency. As it became known, the vote on Brexit will be held on January 15, therefore, the pound will remain in limbo for another week. Accordingly, it is unlikely that this week traders will actively buy the pound, without having any reason. No new data on the topics of Brexit and the possible departure of Jerome Powell from his post there. Powell said on Friday that he does not intend to leave, but, as we have already written earlier, with a strong desire, Trump can find a way to legally remove the head of the Federal Reserve. However, for now this is just talk.

Trading recommendations:

The GBP/USD currency pair continues to move up, which may well be completed in the near future. Formally, the target for the longs is the resistance level of 1.2877, and as long as the MACD is up, the buy orders can be maintained.

Sell orders are recommended to be considered no earlier than fixing the price below the Kijun-sen line. But even in this case, a downward movement is not expected below the support level of 1.2499, which continues to be a local low.

In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.

Explanation of illustration:

Ichimoku Indicator:

Tenkan-sen-red line.

Kijun-sen – blue line.

Senkou span a – light brown dotted line.

Senkou span B – light purple dotted line.

Chikou span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD:

Red line and histogram with white bars in the indicator window.

The material has been provided by InstaForex Company - www.instaforex.com