Analysis of transactions in the GBP / USD pair
GBP/USD reaching 1.2528 led to a buy signal in the market, which resulted in a more than 40 pip price increase since the MACD line was moving upwards. But closer to the middle of the day, the test of the same level prompted a signal to sell as the MACD line began to move below zero. This led to the pair dipping by more than 120 points.
The decision of the Bank of England disappointed traders as the regulator raised rates only to 1.0%, announcing a gradual tightening of policy without direct hints of an active fight against inflation. As such, according to the forecasts of economists, CPI will most likely exceed 10.0% this year.
Today, the UK will release a report on construction PMI, followed by a speech from Bank of England MPC member Katherine L. Mann. There is little chance that these will help the pound in any way, so it would be best to take on short positions in GBP/USD. Additionally, the US will publish its April data on the labor market, where the unemployment rate is expected to decrease. A less active growth in the number of employees may negatively affect the dollar, but a jump in the average hourly wage will return demand as such indicates continued high inflationary pressures in the US. FOMC members John Williams and Raphael Bostic will also deliver speeches today.
For long positions:
Buy pound when the quote reaches 1.2374 (green line on the chart) and take profit at the price of 1.2560 (thicker green line on the chart). There is little chance for a rally today, expect if the US reports weak employment data. 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 1.2328, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2374 and 1.2430.
For short positions:
Sell pound when the quote reaches 1.2328 (red line on the chart) and take profit at the price of 1.2254. Pressure may return if employment data from the US exceed expectations. 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 1.2374, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2328 and 1.2254.
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.
