2021 has left us an interesting January for the markets with almost a coup in the U.S. and the Reddit’s flash mob with GameStop. Our conclusion is that regardless of the good analysis you are doing today, something totally unexpected can happen, so it is better to have your stop-loss ready to save your hard-earned money in case the new event moves against you.
GBP/USD for February 2021
The GBP/USD pair has been showing strength lately. In January, we said that a close above 1.3685 could lead us to test the 1.41 – 1.42 level, and now we think that it is possible. It is true that we only had one week with a close above 1.3685, and it would be desirable to have another one, if not this week, the next.
So if we consider the surpass of the resistance as valid, the stop-loss could be at 1.3340, meaning a 2.3 percent of potential loss. Should the trade work, the profit would be 5.4 percent (being optimistic and taking 1.42 as an objective, but if weakness is spotted near to 1.41, we would close it, too). This gives us a ratio profit/loss of almost two; so if the price goes down a little more, it could be an interesting operation for a small share of capital.
However, the long-term trend is bearish; and, in this case, we would be betting against it. As a result, one should be very cautious with the amount of money committed, more because we are now below the resistance, and we only had one close above it.
Thus, our forecast is that the price will go up in the next weeks, but of course that is no more than an opinion.
This article was written when the GBP/USD was at 1,3647 on February 2.
EUR/GBP for February 2021
In January, we said that the EUR/GBP pair was in a sideways movement between 0.8850 and 0.93, and right now, it seems the price is breaking the support.
When doing our analysis, we look at weekly charts, so theory says we should wait until this week’s close. If it is below 0.8850, the price will be saying that the sideways is broken, and it feels like it is going down.
However, next objective is not very far away. The support is in the range between 0.8736 and 0.8660, which makes the trade uninteresting.
Our forecast is that the price will at least touch this support; and if it is surpassed, there is room to fall until the 0.84 to 0.8350 level.
This article was written when the EUR/GBP was at 0.8807 on February 2.
We do not give financial advice, and this blog post is only for entertainment purposes.