There is an interesting situation on the IronTrade charts. While the experts keep talking about the energy crisis in the old world and the food crisis in the new world, gigantic western companies defiantly overlook what is happening, emphasizing that it is only a temporary issue. The real question here is who has the most issues.
Fundamental arguments
In the run-up to winter, the main risk is energy security. It is well organized in the United States but firmly pushes the Great Britain Pound. Also, while Britain has to buy expensive gas, the US continues to sell it to China because they simply pay more. Both countries experience the food and production crisis; however, it is much worse in Britain than in the US.
Technical arguments
From the technical point of view, the GBP/USD pair remains in a downtrend, having only temporary corrections from time to time. For example, such a correction is happening right now. We think that the local maximum is already reached, and IronTrade experts expect further downward movement.
Big traders analysis
Picture 1. A price chart of GBP/USD and the indicator of big traders for 28.09.2021 – 26.10.2021.
As we can see in picture 1, the demand for GBP has significantly risen, pulling the GBP higher against the USD. However, we can see that even the demand has grown considerably, the long-term trend has not been reversed even against the backdrop of the old dollar.
Forecast
Keeping in mind all things mentioned above, we can conclude that the asset remains mixed. However, the GBP is exposed to much more risks than the USD because the USA is more energy-secure (and even sells natural gas to China, making an extra profit). There is also a lack of response to the GBP demand growth and a lack of penetration of resistance levels.
So, the forecast for GBP/USD is DOWNWARDS.
For better control over your positions, we recommend using the RSI (14) indicator.
RSI helps to recognize when the market is in an overbought or oversold condition.
We recommend keeping on average 2 trades down and 1 trade up to keep the level of risk moderate.
Try to implement this trading idea on IronTrade.com to increase the income and get the maximum from these trading ideas.
