On Monday, February 14th, the GBP/USD pair continued trading in the last week's mode, i.e. it was swinging with no definite direction. Unlike the EUR/USD pair, which at least is moving in a certain trend, the cable has been trading mixed for over a week already, and it seems to be still indecisive. In the past six days, the rate was fluctuating between 1,3500 and 1,3600. That's why the current situation looks more like a flat trend which is poor conditions for traders. There were few macroeconomic reports on Monday, whereas the fundamental factors were abundant which brought even more uncertainty to the market. First, the Federal Reserve surprised the markets by announcing a special meeting to discuss the interest rate policy. Second, the geopolitical tensions in Eastern Europe escalated further. Under these circumstances, the euro is doing really great compared to the British pound.
The technical picture on the 5M chart looks rather complicated. Last week, the pair was stuck in a flat trend, and the start of this week was the same. During the European session, there was a moment when the pair demonstrated some robust movements, but later in the day, it lost momentum. So, the situation is even worse than with the EUR/USD. There are still a lot of levels on the 5M time frame as the price remained in a narrow price range which can be clearly seen in bigger time frames. Naturally, false signals were formed during a flat trend. The first sell signal appeared when the rate broke below 1,3513. After that, the price could not reach the next level which was just 25 pips away from the first level. Consequently, the pair tried to form another signal near 1.3513 but also failed. For several hours, the rate fluctuated alongside this level, unable to break it. At that moment, it became clear that we are unlikely to see any definite trend on Monday, so we just ignored all the signals that were formed near 1.3513.
Trading plan for Tuesday, February 15th:
As seen on the 30M time frame, the upward tendency has been invalidated. The pair has been stuck between 1.3488 and 1.3643 for six days already. We cannot say for sure that the trend is flat, but no directional moves can be seen currently. That is why the pound sterling is likely to be trading in a mixed mode. The target levels on the 5M time frame can be found at 1.3431-1.3440, 1.3488, 1.3563-1.3580, 1.3598-1.3603, 1.3652-1.3660. Set a Stop loss at a breakeven point if the rate goes 20 pips in your direction after opening a trade. Tomorrow, an array of important data from the UK is slated for release including the Unemployment report, the Wages stats, and the Claimant Count Change. At the same time, the market is eager to learn the Fed decision following its special meeting. So, Tuesday is going to be a rather eventful day.
