Analysis of transactions in the GBP / USD pair
GBP/USD tested 1.1981 on Wednesday. At that time, the MACD line was far from zero, so the upside potential was limited. Some time later, the pair hit 1.1925, and a similar scenario took place. Since the MACD line was still far from zero, the downside potential was also limited.
Business activity data in the UK construction sector, as well as the statements made by MPC member Jonathan Cunliffe, did not help pound build an upward correction yesterday, while the statements made by MPC member Jonathan Cunliffe were ignored by the market. Meanwhile, reports from the IHS Markit exceeded expectations, strengthening the demand for the dollar even further.
Ahead are important reports that could drive the market, such as labor productivity data and house price index in the UK. The two may prompt a price increase in GBP/USD provided that the figures exceed expectations. Bad reports may be ignored by sellers as an upward correction has been brewing for a long time already. Later in the afternoon, the US will post reports on the labor market, particularly the change in the number of people employed in the non-farm sector and the number of first-time claims for unemployment benefits. The two may provide more buying pressure to dollars. US trade surplus figures and speeches by FOMC members are unlikely to have a strong impact on the market.
For long positions:
Buy pound when the quote reaches 1.1965 (green line on the chart) and take profit at the price of 1.2031 (thicker green line on the chart). However, there is little chance for a rally today because the market is bearish. Nevertheless, when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1915, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.1965 and 1.2031.
For short positions:
Sell pound when the quote reaches 1.1915 (red line on the chart) and take profit at the price of 1.1871. Pressure will return if there is no bullish activity at yearly lows and if the UK releases weak economic statistics. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.1965, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1915 and 1.1871.
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.