The GBP/USD pair was trading quite predictably before the collapse in the second half of today. The pair's quotes returned to the upper border of the side channel and bounced off it two more times. Therefore, novice traders could already open short positions at these moments, as we advised yesterday. However, in general, it should be noted that the pound failed to continue the upward movement, which once again showed the lack of desire on the markets to trade the pair for an increase. Although after the collapse by 170 points, we would on the contrary assume that today the pair will return to the level of 1.3359. Everything looks too much like a banal disruption of bulls' Stop Loss orders. At a time when the pair seems to have completed the downward trend and was already "aiming" for a new upward trend, such a collapse occurs. At the same time, it is not even possible to say for sure why it happened. Formally, the timing of Powell and Yellen's speech in the Senate coincided with the fall, but this was their second speech in the Senate in two days. Just in front of different committees. Usually the text of the speeches is the same, except that Powell or Yellen were asked some uncomfortable question, the answer to which shocked the market...
On the 5-minute timeframe, the movement of the pound/dollar pair on Tuesday was quite interesting. There were much fewer trading signals during the day than for the euro/dollar pair, which is even good. In principle, we can only talk about two sell signals that have formed around the level of 1.3362. This level is the maximum of the previous day - Monday. And also Fridays. As you can see, two excellent signals were formed around him, which should have been worked out. But not everything is so simple. After the first signal, the pair went down more than 20 points, so a Stop Loss order should have been placed at breakeven. According to this order, the sale transaction was closed, as the quotes returned to the level of 1.3362 in the American session. They returned to bounce back again, which coincided with the speeches of Jerome Powell and Janet Yellen. However, the fall did not start instantly, so novice traders could have time to open new sell orders on this signal. Subsequently, the pair overcame the levels of 1.3304, 1.3276, 1.3246. And when the price was fixed back above 1.3246, it was possible to close this deal. It could also close on any Take Profit, so the profit was received in any case.
How to trade on Wednesday:
At this time, on the 30-minute timeframe, the downward trend was canceled in just a couple of days and a side channel was formed. And in a couple of days, the horizontal channel was canceled and a new downward trend was formed, judging by the nature of which, it will also be short-lived. The important levels on the 5-minute timeframe are 1,3193, 1,3246, 1,3276, 1,3304, 1,3362, 1,3407 – 1,3416. We recommend trading them on Wednesday. The price can rebound from them or overcome them. There are no important levels below, as the price has not been at these price points for more than a year. As before, we set Take Profit at a distance of 40-50 points. On the 5M TF, you can use all the nearest levels as targets, but then you need to take the profit, taking into account the strength of the movement. When passing 20 points in the right direction, we recommend setting the Stop Loss to breakeven. On December 1, the business activity index for the manufacturing sector will be published in the UK and Andrew Bailey will speak, which may be interesting. In America, we highlight the ADP report and the ISM Manufacturing Business Activity Index. As you can see, tomorrow there will also be interesting statistics and a foundation.
