The GBP/USD pair was trading lower on Friday, but this move was completely unpredictable. It would seem that both major pairs move almost identically if you look at the higher timeframes. But a serious difference is noticeable on the hourly timeframe. From February 26 to March 4, the pound/dollar pair, in fact, stood in one place and did not go down. During this time, the downward trend line could have been rebuilt five times, and the price would have settled above it five times. So the current downward trend is very, very formal. Back on Wednesday, traders had two trendlines at their disposal, but trading was absolutely crazy on Thursday and the whole technical picture was disrupted. As a result, the pair's quotes rebounded off the 1.3999 level, which triggered a new round of downward movement. In our last review, we advised you to not enter the market on Friday. The likelihood of another crazy day was too high, especially given the amount of important macroeconomic statistics that was planned for that day. Now the downward trend seems to be continuing, but this does not mean that the pound will move more logically and more calmly. We continue to believe that the pair's current movement is inconvenient to work out, especially for beginners.
The UK did not release an important report last Friday, and US macroeconomic reports and the growth factor in the yield of US government bonds caused the dollar to fall, because of which the entire foreign exchange market seemed to go crazy in the last week and a half. However, it was these factors that traders reacted to on Friday. The pound fell again, but the further prospects for the pair are difficult to predict. Most importantly, it is unclear how long the markets are going to pay increased attention to government bonds in the United States, if two weeks ago no one even thought about them?
No major events scheduled in the UK and the US on Monday, March 8, so fundamentals may be missing on this day. However, this does not mean that trading will be calm and an upward correction will begin. The markets are now in an agitated state, so a strong downward movement can easily continue on Monday. Especially if it turns out that the yield on US Treasury bonds is growing again.
Possible scenarios on March 8:
1) Long positions are irrelevant at the moment, since there is a downward trend line. Buyers need to wait for the price to settle above this trendline to be able to consider bull trading. Take note that this trend line is rather formal, so you should be careful when opening any positions and do not forget about Stop Loss. On Monday, the price is unlikely to be able to get to the trend line and overcome it.
2) Short positions are also relevant, since the downward trend line is also present. However, novice traders will need to at least wait for a round of upward correction so that the MACD indicator is discharged to zero. After that, it will be possible to track the formation of sell signals and open short positions with targets near the support levels of 1.3840 and 1.3791. When passing in the right direction, we recommend setting 15-20 Stop Loss to zero.
