Analysis of transactions in the GBP / USD pair
GBP / USD rose by 15 pips on Tuesday amid a signal to buy that coincided with the MACD line moving above zero. Then, in the afternoon, another increased was observed, this time by around 20 pips. The reason was the buy signal that coincided with the MACD line being in the oversold area.
Trading may lag today because there are no important reports expected in the morning. But by mid-day the pound may collapse amid statements from Bank of England members and aggravated situation on the ongoing dispute over Brexit.
Yesterday, rumors emerged that tensions in Northern Ireland were escalating and that their commitments to the trade agreement were not being fulfilled. The European Union said they will retaliate if the UK continues to disregard the agreement.
Going back, pound may drop further this afternoon amid strong data on US CPI and jobless claims. A sharp increase in inflation is likely to bring back demand for the US dollar, which will further complicate the situation in GBP / USD.
For long positions:
Open a long position when pound reaches 1.3570 (green line on the chart) and take profit at 1.3615 (thicker green line on the chart). Growth will be observed if the UK publishes strong statistics and if there is good news on Brexit.
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 1.3543, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3570 and 1.3615.
For short positions:
Sell pound when the quote reaches 1.3543 (red line on the chart) and take profit at the price of 1.3490. The decline will continue if the situation around the Brexit agreement starts to deteriorate.
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 1.3570, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3543 and 1.3490.
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.
