GBP/USD: plan for the European session on Jan 6, 2020

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To open long positions on GBP/USD you need:

The pressure on the pound remained on Friday, but the bulls are doing their best to at least somehow regain the market position. Today, they can be helped by a report on the UK services sector, which will set the direction of the market at the beginning of this week. In case of good indicators, a break of the upper limit of 1.3108 will strengthen the demand for the pound, which will lead to the renewal of highs in the areas of 1.3154 and 1.3195, where I recommend taking profits. In the scenario of a pound decline after the release of data, the formation of a false breakout in the support area of 1.3064 will also be a buy signal. Otherwise, it is best to open long positions only after the formation of a false breakout in the region of a low of 1.3018, or immediately to a rebound from support at 1.2966.

To open short positions on GBP/USD you need:

Bears will wait for a report on the service sector, and if it turns out to be worse than economists’ forecasts, a breakthrough of the lower boundary of the triangle, which indicates the continuation of the current downward trend, as well as a breakthrough of support at 1.3064, all this will lead to further GBP/USD decline to the area of lows 1.3018 and 1.2966, where I recommend taking profits. An unsuccessful attempt by the bulls to return to the resistance level of 1.3108 will also be a signal to open short positions. If the pair grows above this range, you can sell on the rebound from a high of 1.3154, or after updating larger resistance at 1.3195.

Signals of indicators:

Moving averages

Trade is conducted below 30 and 50 moving averages, which indicates that pressure will be preserved in the short term.

Bollinger bands

A break of the lower boundary of the indicator at 1.3064 will increase pressure on the pound. A break of the upper boundary in the area of 1.3105 may lead to larger growth.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence – moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20

The material has been provided by InstaForex Company – www.instaforex.com

Source:: GBP/USD: plan for the European session on January 6. Weak UK services data could be a significant problem for the pound

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