Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on January 27

Analysis of transactions in the EUR / USD pair

EUR / USD traded downwards yesterday, as a result of which several signals appeared in the market. For instance, during the European session, a sell signal appeared at 1.2124, however, at that time, the MACD line was in the oversold zone, which seriously limited the downside potential of the euro. A similar situation occurred with the buy signal at 1.2149, since during which the MACD line was in the overbought zone, so it was impossible to enter the market. Such false signals occur due to lack of market direction and low volatility.

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Trading recommendations for January 27

The US Fed will hold an important meeting today, during which members will discuss the current monetary policy. Most likely, the Fed will retain the current rates and volume of redemption of bonds, and during the speech, its chairman, Jerome Powell, will focus on the need for fiscal stimulus. However, pumping the economy with money will surely weaken the position of the dollar, so it would be best to trade long positions in EUR / USD, as the quote could rise to yearly highs in the near future. But since there are no important statistics scheduled to be published today, it is possible that false trading signals will appear again in the market.

For long positions:

Buy the euro when the quote reaches 1.2171 (green line on the chart), and then take profit around the level of 1.2220. EUR / USD will rally after the meeting of the US Federal Reserve System (FRS).

But keep in mind that before buying, the MACD line should be above zero and is starting to rise from it.

For short positions:

Sell the euro after the quote reaches 1.2148 (red line on the chart), and then take profit at the level of 1.2111. EUR / USD will trade downwards if the FRS gives a very positive assessment of the US economy.

Of course, before selling, it is important to make sure that the MACD line is below zero and is starting to move down from it.analytics6010eba498e64.jpg

What's on the chart:

The thin green line is the key level at which you can place long positions in the EUR / USD pair.

The thick green line is the target price, since the quote is unlikely to move above this level.

The thin red line is the level at which you can place short positions in the EUR / USD pair.

The thick red line is the target price, since the quote is unlikely to move below this level.

MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.

Analysis of transactions in the GBP / USD pair

Two false signals appeared for GBP / USD yesterday, but thanks to the MACD line, traders managed to avoid them. Clearly, the signal to sell at 1.3641 should be ignored, especially since at that time, the MACD line was in the oversold zone. Nonetheless, it made the pair drop by about 25 pips in the market.

As for the buy signal at 1.3670, the sharp increase it caused blocked the MACD line from falling to zero, thereby holding it at the oversold one. Accordingly, it limited the pair's upward potential.

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Trading recommendations for January 27

GBP / USD traded upwards yesterday, after being supported by the recent statements of UK Treasury Secretary Rishi Sunak. According to Sunak, all employment assistance programs could be extended until the beginning of this summer, the final decision for which will be made at a meeting this March.

Today, no important news is expected to be released, so pound bulls can continue building up long positions in the market.

For long positions:

Buy the pound when the quote reaches 1.3740 (green line on the chart), and then take profit at the level of 1.3785 (thicker green line on the chart). GBP / USD will climb even higher if the quote breaks out of the yearly highs.

But keep in mind that before buying, make sure that the MACD line is above zero and is starting to rise from it.

For short positions:

Sell the pound after the quote reaches 1.3716 (red line on the chart), and then take profit at the level of 1.3676. GBP / USD will trade downwards if there is negative news on COVID-19 vaccines.

Keep in mind that before selling, make sure that the MACD line is below zero and is starting to move down from it.

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What's on the chart:

The thin green line is the key level at which you can place long positions in the GBP/USD pair.

The thick green line is the target price, since the quote is unlikely to move above this level.

The thin red line is the level at which you can place short positions in the GBP/USD pair.

The thick red line is the target price, since the quote is unlikely to move below this level.

MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.

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