Hourly chart of the GBP/USD pair
It looks more and more stable for the GBP/USD pair. Firstly, the quotes of the pair continue to trade confidently above the rising trend line, without any attempts to gain a foothold below it. Secondly, yesterday's Federal Reserve meeting and its results influenced the pound to a much lesser extent than the euro. Thus, we can even assume that traders have already had enough of purchases for the euro and are ready to slightly "let go", which will allow it to start falling, but this cannot be said for the pound sterling yet. In any case, as long as the price is above the trend line, you should only trade up. The time for bears will come only after breaking the trend line.
We have already written about the results of the Fed meeting in the euro/dollar article for beginners. We recommend that everyone read it, since this partly applies to the pound/dollar pair. In the same article, we will focus on the events that are scheduled for Thursday, July 30. And there are a lot of them. Nothing interesting will happen in the UK, as usual. But the most important report for this week will be published in the US. We are talking about the preliminary value of GDP in the second quarter of 2020. GDP - the Gross Domestic Product is a monetary representation of all goods and services produced in a country over a certain time (usually a month, quarter, or year). The GDP indicator for the second quarter will show how much the value has changed compared to the first quarter. And now, attention! Forecasts predict a 35% drop in the most important indicator of the state of the US economy. The value for the second quarter is not final, it may be adjusted over the next month or two, but it is unlikely to be adjusted too much. For comparison, the EU countries and the EU as a whole may lose up to 12% of GDP in the second quarter, according to the same forecasts. Thus, according to today's report, the American economy could sink three times more strongly due to the coronavirus epidemic and the lockdown (as the hard quarantine is called) than in Europe. The corresponding report will be published later in the UK, but even it does not predict such a strong fall in the economy, although the UK has suffered the most among the European countries. This leaves one question: will traders react to these terrible numbers? If yes, then the US dollar is waiting for a new drop in the afternoon. But it is also possible that a reaction will not follow.
The following scenarios are possible on July 30:
1) If the MACD indicator gives a new buy signal (so far there is a signal for a correction, circled in a red circle) during the day, then we will recommend buying the pound/dollar pair again with targets at 1.3033 and 1.3073. When this signal is formed, the price should be located strictly above the trend line.
2) But from our point of view, you can only consider sales after the price consolidates below the trend line. In this case, the trend will change to a downward one and the initiative will go to sellers. The targets for sales will be the levels 1.2871 and 1.2831.
What's on the chart:
Support and Resistance Price Levels - Levels that are targets when buying or selling. You can place Take Profit levels near them.
Red lines - channels or trend lines that display the current trend and show which direction it is preferable to trade now.
Arrows up/down - indicate when you reach or overcome which obstacles you should trade up or down.
MACD indicator is a histogram and a signal line, the crossing of which is a signal to enter the market. It is recommended to use in combination with trend lines (channels, trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal 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 are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company - www.instaforex.com