Analysis of trades and tips on trading GBP
The pound/dollar pair tamed an attempt to break through 1.3125 at a time when the MACD indicator had just started to decline from the zero, level. It was a confirmation of the correct entry point in the short positions on the pound sterling. Unfortunately, the entry point led to losses as there was no rapid fall. Only in the afternoon, after another test of 1.3125, it was possible to enter the market. At that time, the MACD indicator had just started to move down from the zero level again. So, short positions on a breakout of this range were very relevant. As a result, the pair failed by more than 90 pips.
It seems there has been a decrease in long positions on the pound sterling. Although it may win luster with investors again, its upward movement is limited by the geopolitical situation and risk aversion at the end of the week. After studying yesterday's US data, namely the retail sales report and the consumer confidence index, investors became even more confident that the Fed would continue to tighten monetary policy to stabilize inflation. It increased pressure on the trading instrument. Today, there are no important fundamental reports for the UK. Thus, bulls have no drivers to push the price higher. To this end, the pair will remain under pressure. However, if it grows, I would advise you to act according to scenario No. 2 for opening short positions. In the afternoon, the economic calendar will be rich in events. Investors are anticipating reports on the US manufacturing sector such as the New York Empire State Manufacturing Index, industrial production data, the total industrial production and capacity utilization report. If all figures are upbeat, the US dollar is sure to maintain its winning streak. The pound sterling, on the contrary, may slump to weekly lows. The aggravation of the geopolitical situation and Russia's active military actions in Ukraine only continue to exert pressure on risky assets.
Buy signal
Scenario No.1: it is recommended to open long positions on the pound sterling today if the price reaches 1.3075 (green line on the chart) with an upward target of 1.3118 (thicker green line on the chart). It is better to close long positions at 1.3118 and open short ones, keeping in mind a downward correction of 20-25 pips from the given level. The pound sterling may climb today after the breakout of the intraday highs. There are no other fundamental reasons for purchases. Important! Before opening long positions, make sure that the MACD indicator is above the zero level and it has just started to rise from this level.
Scenario No.2: it is also possible to buy the pound sterling today if the price approaches 1.3055. At this moment the MACD indicator should be in the oversold area, which may limit the downward potential of the pair. It could also trigger an upward reversal of the market. The pair is expected to grow to the opposite levels of 1.3075 and 1.3118.
Sell signal
Scenario No.1: it is recommended to open short positions today only if the pair hits the level of 1.3055 (the red line on the chart). It may lead to a rapid decline of the pair. The key target level will be 1.3020. I would advise closing short positions at this level and opening long ones, keeping in mind an upward correction of 20-25 pips from the given level. A breakout of this level may increase pressure on the pound sterling. So, it could erase stop orders of buyers, triggering a new decline in the pair. Important! Before opening short positions, make sure that the MACD indicator is below the zero level and it has started to decrease from this level.
Scenario No. 2: it is also possible to sell the pound sterling today if the price drops to1.3075. At this moment, the MACD indicator should be in the overbought area. It may limit the upward potential of the pair. It could also trigger a downward reversal. The pair is expected to slip to the opposite levels of 1.3055 and 1.3020.
Description of the chart:
The thin green line shows the entry point where you can buy a trading instrument.
The thick green line is the estimated price where you can place a Take profit order or lock in profit manually as the price is unlikely to rise above this level.
The thin red line is the entry point where you can sell the instrument.
The thick red line is the estimated price where you can place a Take profit order or lock in profit manually as the price is unlikely to decline below this level.
The MACD indicator. When entering the market, it is important to pay attention to overbought and oversold zones.
Important! Novice traders need to make very careful decisions when entering the market. It is best to stay out of the market before the release of important fundamental reports. It will help avoid losses due to sharp fluctuations in the exchange rate. If you decide to trade during the news release, always place stop orders to minimize losses. Without placing stop orders, you can lose the entire deposit very quickly, especially if you do not use money management, but trade in large volumes.
Remember that to earn successfully, beginners should have a clear trading plan like the one I presented above. Spontaneous trading decisions based on the current market situation are a losing strategy of an intraday trader.
