To be or not to be 1.4500? Prospects for the Bank of England meeting on the GBP/USD pair.
A new week and new opportunities to replenish our wallets. With you Andrew “Tight wallet” Green.
The last five days in the financial market gave us the opportunity to see the character of the British “cable” in all its glory. Having received support from the general sentiment against the US dollar, the GBP/USD pair vigorously put its own path from 1.3850 to 1.4340. The British broke through psychological levels, almopst without forming corrections. The peak of activity was on Thursday, along with statements by Steven Mnuchin (the US Treasury Secretary) about the positive impact of the low dollar rate on the US economy. For a day the pair has passed 300 points, thus practically not noticing the level of 1.4000.
There was no serious news background on the British itself.
What to expect this week:
- of course, primarily, the FOMC meeting (Federal Open Market Committee) – Wednesday, January 31, 2018, at 19:00. There is no special news awaited, but those who have more than 2-3 years of trading experience know that they can appear 🙂
- The report on employment in the US – Friday, February 2, 2018, at 13:30. The forecast is weak, but the data can be higher, given the low indicators of the past time.
In the context of Brexit, too, everything is in the old way and it is not worth to expect something radical. The real situation is really sad, but the current situation on the global weakening of the USD gives an opportunity for upward correction of the pair. To a greater extent, this is a general trend, because there is nowhere to look for special optimism about the British. The general sentiment of some officials in European countries for cooperation after Brexit does not guarantee the preservation of the previous positions of the British manufacturer, on the already foreign market of Europe.
Let’s start the technical analysis and analyze the medium-term prospects for the pair. (Figure # 1)
As we can see, here the main emphasis for the next week – the resistance level 1.4500. There is a good psychological resistance zone in the pair. It is possible that the week will begin with consolidation in the zone 1.4300-1.4100, and only with the help of news factors there will be a necessary impetus for the formation of the necessary maximum. The possibilities of a downward correction, as you see, are limited to 1.3440-1.3500. There, as for me, a very strong and interesting point for purchases in order to continue the upward movement. Very interesting is the zone in the area of psychology 1.4100. There is an upward support line, and in the past resistance, a weekly trend channel (red). In the event of its breakdown, I consider the return to the channel and the formation of minima in the region of 1.3500.
We pass to H1 (Figure # 2) and here are tips for day traders. As you can see, I suppose the possibility of a flute development of events, but this is before the WEDNESDAY. So the recommendation is only valid until the opening of the US market on Wednesday, January 31, at 13:30 UTC.
Examples of transactions:
- BUY limit 1.4010, SL 1.3970, TP 1.4085
- SELL limit 1.4290, SL 1.4340, TP 1.4210
Knowing the nature of the British Pound, I recommend sticking to the policy of not too large SL. If the pair enters the regime of increased volatility, the spurts can be strong and one-sided. So be reasonable, and if you do not fully understand the basic principles of risk management in stock trading, then order an individual training course, the content of which you can find on the Ester website.
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I ask you, dear friends, to be reasonable in trade, do not lose your head and know how to trust professionals!
Andrew Green