Analysis of transactions in the GBP / USD pair GBP/USD reaching 1.2537 led to a buy signal in the market, but having the MACD line far from zero limited the upside potential of the pair. Its second test, however, led to a 35-pip decrease because the sell signal coincided with the MACD line being in the overbought area. Some time after, a buy signal emerged when the pair hit 1.2500. It resulted in a more than 50 pips increase in price. The test of 1.2537 again led to a buy signal that coincided with the MACD line moving above zero. Long positions were opened that time in the hopes of a further price increase.
Yesterday's report on UK PMI helped pound maintain its position within the sideways channel, but today much will depend on the announcements made by the Fed. Upcoming data on the M4 aggregate of money supply, approved applications for mortgage loans and the volume of net loans could also lead to small bursts of volatility, but in the afternoon, the US will announce the results of the Fed meeting, followed by the reports on business activity, composite PMI, ADP employment and foreign trade balance. If the Fed raises rates and signals a further aggressive policy, demand for dollar will rise, which will lead to a decline in GBP/USD.
For long positions:
Buy pound when the quote reaches 1.2500 (green line on the chart) and take profit at the price of 1.2560 (thicker green line on the chart). A rally is possible amid strong statistics on the UK economy, but it will be limited. 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 1.2461, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2500 and 1.2560.
For short positions:
Sell pound when the quote reaches 1.2461 (red line on the chart) and take profit at the price of 1.2412. Pressure is likely to return on the market, especially given today's Fed meeting. However, before selling, traders should make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.2537, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2500 and 1.2439.
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.
