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On Friday, the GBP/USD pair also traded lower. Overall, the British pound has been moving sideways for several weeks within the range of 1.2860 to 1.3043. Although this range is quite broad, it is still considered a horizontal channel. The only significant event on Friday was the University of Michigan Consumer Sentiment Index in the U.S., which exceeded the forecast and the previous reading for November. This justified the renewed growth of the U.S. dollar.
However, it's worth noting that the previous week, the dollar showed almost no decline despite the disastrous Nonfarm Payrolls report. This suggests that the market will buy the dollar under macroeconomic conditions. In other words, the dollar rose sharply on the consumer sentiment index than it fell on the disappointing NonFarm Payrolls report. We continue to believe that the dollar will strengthen in the medium term.
Two solid sell signals were formed on Friday in the 5-minute time frame. The first signal occurred overnight around the 1.2988–1.2993 area. By the time the European trading session opened, the price had barely moved away from the signal level, making it an opportunity to open a short position. During the U.S. session, the price broke below the 1.2913 level, providing a reason to remain in short positions.
In the hourly time frame, the GBP/USD pair attempted to start a correction after a month-long decline but failed to do so. Instead, it remained within the flat range of 1.2860 to 1.3043. We fully support the pound's decline as the most logical outcome in the medium term. The British pound may attempt another correction soon, but for that to happen, it would need support, which neither the Federal Reserve nor the Bank of England has provided.
On Monday, novice traders can expect the downward movement to continue. However, the 1.2860 level keeps the pair from falling further, and a rebound from this level could trigger growth.
On the 5-minute TF, it is now possible to trade at 1.2791-1.2798, 1.2848-1.2860, 1.2913, 1.2980-1.2993, 1.3043, 1.3102-1.3107, 1.3145-1.3167, 1.3225, 1.3272, 1.3365. Although no significant events are scheduled for Monday in the UK or the US, the pair may still experience notable movements.
Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed around these areas.
Red Lines: Channels or trend lines that indicate the current trend and the preferred trading direction.
MACD Indicator (14,22,3): Histogram and signal line—an auxiliary indicator that can also be used as a source of signals.
Major speeches and reports (always found in the news calendar) can significantly impact currency pair movements. Therefore, it's advised to trade cautiously or exit the market during their release to avoid sharp price reversals against prior movements.
Beginners trading on the forex market should remember that not every trade will be profitable. A clear strategy and money management are the keys to success in long-term trading.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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