Analysis of transactions in the GBP / USD pair
Pound sellers did not leave a single chance for buyers to set off a rally in GBP / USD. Immediately after seeing a 15-pip increase, thanks to a signal to buy that coincided with the MACD line being at the oversold area, they briskly brought pound back to its earlier price. Unfortunately, the signal to sell that stemmed from this had to be ignored because the MACD line, at that time, was quite far from zero.
All this happened because UK data released last Friday did little to help pound, while statements from Fed representatives fueled further demand for dollar.
Today, the market may be calm as there are no important statistics scheduled for release in the UK. But in the afternoon, statements from Fed representatives John Williams and Lael Brainard could provoke a surge in market volatility.
For long positions:
Open a long position when pound reaches 1.3695 (green line on the chart) and take profit at the level of 1.3747 (thicker green line on the chart). There is little chance though that the pair will climb up today. Nevertheless, 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 1.3659, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3695 and 1.3747.
For short positions:
Open a short position when pound reaches 1.3659 (red line on the chart) and take profit at the level of 1.3613. A decline will occur if Fed representatives say they will wind down bond purchases as early as possible. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.
The pair could also be sold at 1.3695, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3659 and 1.3613.
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.
