The GBP/USD pair continued its upward movement on Thursday, which began a few days ago. In principle, from the point of view of technical analysis, this movement was quite logical. It was illogical from the point of view of fundamental analysis, since last night the Federal Reserve raised the rate by 0.25% and announced its readiness to raise the rate six more times this year. And any tightening of monetary policy usually supports the national currency. However, nothing of the kind happened on Wednesday, nor did it happen on Thursday at the European session, when the Europeans also had the opportunity to work out the results of the Fed meeting. Everything changed when the Bank of England published its results. Despite the fact that it also raised the rate by 0.25%, and also indicated its intention to fight inflation by tightening monetary policy, the pound fell like a wreck. Losses amounted to 100 points in just an hour. A little later the market began to recover from this fall and at this time the pound/dollar pair is growing again. This is exactly what we warned about earlier: the reaction of the market is not always logical, and yesterday and today we just had the opportunity to see it. All key levels were simply ignored under the onslaught of the foundation.
On the 5-minute timeframe, the technical picture boils down to a collapse of quotes in an hour by 100 points. Prior to this event, a banal upward correction was taking place in the market and not a single trading signal was formed. A buy signal was formed only when the pair reached the level of 1.3193 (which transformed into the level of 1.3210 at the end of the day). But it should not have been worked out, since at that time the price had already gone up from the lows of the day of 70 points. In addition, the results of the Fed meeting were to be published in half an hour, so it was not worth risking all the more. After the collapse, another buy signal was formed when the price overcame the area of 1.3124-1.3134. Formally, this signal could be worked out, although it was formed quite late. However, at that time the market had more or less calmed down, so we could count on a calmer movement. Therefore, 10-20 points could be earned on this deal.
How to trade on Friday:
The pair overcame the descending trend line and continues to move up on the 30-minute TF. However, the movements of the last two days were provoked by two central bank meetings at once, so the current upward trend may be false. In other words, now overcoming the trend line does not mean a change of trend. It is recommended to trade by levels 1.3042, 1.3082, 1.3124-1.3134, 1.3210, 1.3241 on the 5-minute TF tomorrow. When the price passes after the opening of the transaction in the right direction, 20 points should be set to Stop Loss at breakeven. There are no important events or publications scheduled for tomorrow in the UK and America. However, traders may still be under the impression of two meetings at once – the Bank of England and the Fed. Therefore, volatility can remain quite high. We expect that the fall of the British pound may resume. Perhaps the market will receive new data concerning the Ukrainian-Russian conflict, under the influence of which both major pairs have been in the last few weeks.
