Trading plan for January 22

The economic calendar offers us opportunities to trade the British pound and the New Zealand dollar.

At first, there is a release of an average earnings index for Britain at 11:30 MT time. The indicator is expected to increase by 3.3% over the year in the three months to November. This is the strongest payment rise in the last decade. If the actual level is higher, the GBP will be supported.

At the same time, the Brexit headlines will remain in focus for the GBP traders. Yesterday, Theresa May presented her “Plan B” to the Parliament, which contained little to no changes to the current Brexit deal. She said she would continue to negotiate with the EU to find a compromise. She also noted that the second referendum would damage democracy.  Let’s see if today’s updates will impact the pound.

Also, there is a release of the quarterly CPI for New Zealand at 23:45 MT. The level of consumer price index is expected to remain at the same level. However, if the index reaches a higher-than-expected level, bulls will push the kiwi up.

Let’s look at the charts:

As we can see from the daily chart, GBP/USD managed to rise a little bit yesterday and retested the 100-day MA. Parabolic SAR shows an uptrend for the pair, which means the pair may continue to rise.  On the H4, after yesterday's gains the pair has entered the correction phase. If bears continue to pull the pair down, it will fall to the support at 1.2847. The next support lies at 1.2828. If the cable gains a positive momentum, the pair will rise to the resistance at 1.2910. The next resistance is placed at 1.2931.  

 Let’s look at the kiwi. The pair has been suffering since January 14. The reason behind it lies in the risk-off sentiment due to the unsolved problems around the trade negotiations between the US and China.   However, according to Parabolic SAR, it is too early to talk about the change of the trend. On the H4, the pair has been trading with low volatility since yesterday. If the downward pressure continues, the pair will manage to break the support at 0.6714. The next support is placed at 0.6694. Otherwise, the pair will face the resistance at 0.6730. The next resistance is placed at 0.6441.


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