The GBP/USD pair continued its almost landslide fall on Tuesday. For the second day in a row, the pound falls amid absolutely disastrous statistics from the UK. One important clarification should be made here. For example, the pound fell by 130 points on Tuesday. And this is without taking into account the evening growth. If we take it into account, then the pound fell by 215 points from the day's high. And on what basis? Based on the UK unemployment rate rising from 3.7% to 3.8%??? Or based on the fact that wages in Great Britain turned out to be slightly worse than traders expected? Both of these reports under normal conditions would cause a reaction of 20-30 points high. But now the market is clearly set to sell the pound, so even such data provokes a collapse. It should be recalled that tomorrow the Federal Reserve will announce the results of its meeting, and the day after tomorrow the Bank of England will announce the results of its meeting. Thus, we are waiting for two hyperactive days, although what kind of increased volatility can we even talk about now, if the pound goes through 200-250 points every day anyway? We believe that anything can be expected from the pair in the next two trading days. It is impossible now to predict where the pair will move after the meeting of the Fed or the BoE.
On the 5-minute timeframe, you can clearly see that the price moved only in one direction for most of the day. But at the same time, it also managed to generate false signals, unfortunately. For example, it all started with a buy signal near the level of 1.2164. After its formation, the pair failed to go up even 20 points. Of course, it could be ignored, since now there is an almost landslide fall of the pound, on which it is very inexpedient to buy the pair. The next sell signal turned out to be stronger, and after it the pair dropped to the level of 1.2071, from which it initially also rebounded, forming another false signal, which brought losses to novice traders. The fourth and last trade turned out to be profitable, as the pair managed to go down about 55 points after surpassing the 1.2071 level. As a result, we have two losing trades, in which traders were in the red by 60 points, and two profitable trades, which brought them 110 points. Therefore, a total profit was received, which is what we need.
How to trade on Wednesday:
The pound continues to sharply fall on the 30-minute timeframe. And what will happen next this week, it is very difficult to guess now, since the meetings of the BoE and the Fed will be held on Wednesday and Thursday, and these are the most important events in the foreign exchange market. The pair's volatility is already at its highest, so we can't even say that tomorrow and the day after tomorrow we will see an increase in volatility. On the 5-minute TF, it is recommended to trade at the levels of 1.2071, 1.2164, 1.2216, 1.2260, 1.2296. There are simply no other levels below the level of 1.2071 now. When the price passes after opening a deal in the right direction for 20 points, Stop Loss should be set to breakeven. There are no important events planned for tomorrow in the UK (thank God!) Only a report on retail sales in America, which is unlikely to provoke a strong reaction, and in the evening - the results of the FOMC meeting and a press conference with Fed Chairman Jerome Powell. By that time, newcomers should have already left the market and closed all transactions.
