On Tuesday, GBP/USD somewhat retraced up. However, its corrective move was weaker than that of EUR/USD. The pair reached 1.3082 and rebounded from it. The quote is now ready to resume its downtrend, which is supported by the trend line. Let's hope the Bank of England and the US Federal Reserve do not announce decisions that could disappoint the market. For instance, if the US regulator hikes rates by just 0.25%. In recent months, traders were preparing themselves for a 0.50% increase. Above all else, raising the rate by 0.25% will not be able to tame growing inflation in the United States. Therefore, any forecasts should not be made before the monetary policy meetings of both central banks. The technical picture now indicates a downtrend, but the situation may reverse by the end of Thursday. You could give an outlook for the pound as soon as the trend line is broken.
In the M5 time frame, the technical picture looked very nice. There were just three signals produced, but all of them were accurate. Thus, when the pair rebounded from 1.3026 for the first time, it failed to continue the upward move and had to return to 1.3026. When the quote rebounded from the mark for the second time, it headed towards 1.3082 and then pulled back. So, beginner traders were able to yield a profit of about 25-30 pips from their buy trades. A pullback from 1.3082 generated a sell signal. A short position from this mark could have bought a trader some 20 pips of a profit. By the end of the day, such a trade should have been closed manually. Thus, even 40 pips of profit at the time of a total volatility of 87 pips is seen as a pretty good result. What is important is the fact that not a single false signal or unprofitable trade was made during the day.
Trading plan for Wednesday:
In the 30M time frame, the pair has been retracing up for several days. However, it no longer matters as the technical picture may drastically change on Wednesday and Thursday. The downtrend is likely to resume today with the target at 1.2913. However, if unexpected decisions are made at the monetary policy meetings of the BoE and the Fed, the upward move may extend. The target levels in the 5M time frame are seen at 1.2913, 1.3000, 1.3026, 1.3082, 1.3124-1.3134, and 1.3193. A stop-loss order should be set at the breakeven point as soon as the price passes 20 pips in the right direction after a trade has been opened. No macro events will unfold in the United Kingdom on Wednesday. Meanwhile, the outcome of the Fed's meeting and Chairman Powell's press conference will catch traders' interest. The US retail sales report, however, will be of secondary importance to the market. Notably, the outcome of the Fed's meeting will become known late at night, but the novice should have already exited the market by that time in any case.
