Analysis of transactions and tips for trading GBP/USD
The test of 1.2406 occurred when the MACD line was already far from zero, so the upside potential was limited. Sometime later, another test took place, but this time the MACD line was in the overbought area, which was a good signal to sell. This resulted in a price decrease of over 80 pips.
Weak service PMI in the UK led to a sell-off in pound; however, in the afternoon, there was a rebound as weak US PMI report gave back confidence to buyers.
Today, apart from the UK Producer Purchase Price Index and Producer Output Price Index, there is nothing that could affect the market. For this reason, buyers will have a chance to see GBP/USD rise and return to monthly highs. There is also no key data due out in the US in the afternoon.
For long positions:
Buy pound when the quote reaches 1.2344 (green line on the chart) and take profit at the price of 1.2402 (thicker green line on the chart). Growth could occur as there are no statistics scheduled to be released today. However, make sure that when buying, the MACD line is above zero or is starting to rise from it. Pound can be bought at 1.2314, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2344 and 1.2402.
For short positions:
Sell pound when the quote reaches 1.2314 (red line on the chart) and take profit at the price of 1.2261. Pressure will increase if the attempt to rise above 1.2344 fails. Weak UK inflation report could also lead to a price decline. However, make sure that when selling, the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.2344, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2314 and 1.2261.
What's on the chart:
The thin green line is the key level at which you can place long positions in the GBP/USD pair.
The thick green line is the target price, since the quote is unlikely to move above this level.
The thin red line is the level at which you can place short positions in the GBP/USD pair.
The thick red line is the target price, since the quote is unlikely to move below this level.
MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.
Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.