Analysis of transactions in the GBP / USD pair
Few traders took long positions on Monday because even though market signals said to buy, the MACD line was so far above zero, which means that the upside potential of GBP / USD is limited. The signal to sell that followed also did not make profits despite the MACD indicator being in the overbought area. At best, what traders could do was to break even. No other signal appeared for the rest of the day.
GBP / USD rose a bit yesterday morning, thanks to the good PMI report for the UK construction sector. Meanwhile, the statements of Bank of England Deputy Governor Ben Broadbent, which many expected to incite more demand for pound, were ignored by the market.
A stronger rally may be seen today since there are no UK statistics scheduled to be published. And since the upcoming report on the foreign trade balance in the US is unlikely to shake the market, traders should stick to bullish transactions in GBP / USD.
For long positions:
Buy pound when the quote reaches 1.3295 (green line on the chart) and take profit at the price of 1.3329 (thicker green line on the chart). A rally will jump-start the bullish correction anticipated by buyers for a long time.
Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3271, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3295 and 1.3329.
For short positions:
Sell pound when the quote reaches 1.3271 (red line on the chart) and take profit at the price of 1.3236. Strong data on the US economy will bring pressure back on GBP / USD.
Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.3295, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3271 and 1.3236.
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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.