The GBP/USD pair first rose to the level of 1.3268 on Wednesday, which is the upper boundary of the horizontal channel, and then, pushing off from it, began a round of downward movement inside the same channel. Thus, the pound/dollar pair did not stand in one place all day, but at the same time it was also flat, as was the euro/dollar pair. However, there was interesting data for the pound/dollar pair during the day. Firstly, we had a report on retail sales in the United States, which turned out to be much worse than forecasts. Secondly, a report on inflation in the UK, which turned out to be higher than forecasts. Neither in the first nor in the second case did the market reaction that we expected follow. The report on British inflation (the first tick in the chart below) provoked a movement up by 20 points and down by 20 points in five minutes. This is the end of the report processing. The report on US retail sales provoked a 10-point drop in the dollar, which is simply ridiculous. Well, in an hour the Fed will announce the results of the meeting. And tomorrow the Bank of England will announce the results of the meeting. Therefore, the pair can decently "fly" from side to side.
On the 5-minute timeframe, the movement of the pound/dollar pair on Wednesday was quite difficult, but with the proper degree of analysis, all false trading signals could be avoided. The first sell signal was formed exactly at the five-minute mark when the inflation report was published in Britain. Thus, it should have been ignored – the report was too important. Moreover, the value of the report should have provoked an upward movement, so novice traders should have been interested in a buy signal in this case, not a sell signal. The next buy signal was formed when the price surpassed the 1.3256 level. However, the 1.3268 level was too close from above (only 12 points), so we should have waited for the pair to surpass this level. When the pair surpassed 1.3268, it almost immediately turned out to be near the next level of 1.3286, that is, it was not advisable to open a long position again. As a result, the pound stopped rising there, and the price began a smooth decline. The next signal - for short positions - was formed when the pair settled below the level of 1.3256 and this signal could be worked out. Then for several hours the pair could not begin to move down in any way, but it still began later and by the evening the quotes went down 40 points. Therefore, the transaction could be closed by Take Profit for a profit of 40 points.
How to trade on Thursday:
The pair continued to be inside the 1.3192-1.3268 horizontal channel on the 30-minute timeframe. However, there will be plenty of reasons to leave today and tomorrow. The important levels on the 5-minute timeframe are 1.3170, 1.3192, 1.3268, 1.3282 and 1.3310. We recommend trading on them on Thursday. From them, the price can bounce or overcome. 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 consolidate 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. The results of the Bank of England meeting will be announced in the UK on December 16. In addition, the markets may continue to be impressed by the results of the Federal Reserve meeting. Therefore, volatility can be high, and movements are difficult to predict.
