Analysis of transactions in the GBP / USD pair
GBP/USD reaching 1.2599 prompted a buy signal in the market, however, having the MACD line far from zero limited the upside potential of the pair. Shortly after, it sank down to 1.2578, where a sell signal appeared. But since the MACD line was still far from zero, the pair did not fall and instead went back to 1.2599. A buy signal was then formed, but it failed again and brought the pair back to 1.2578. This time, the MACD line finally went down, allowing the pair to move by 40 to 120 pips.
UK's report on business activity in its manufacturing sector helped pound maintain its positions yesterday morning, but demand quickly ended after the US released data on its economy. Today, there are no statistics scheduled to be released in the UK, which can help the pound rally, but traders should understand that at each significant growth drives sellers to act more actively. Also during the American session, a fairly large number of statistics on the US labor market will be released, which may raise dollar demand provided that the figures exceed expectations. Following it are reports on productivity in the non-agricultural sector and volume of industrial orders, as well as a speech from FOMC member Loretta Mester.
For long positions:
Buy pound when the quote reaches 1.2532 (green line on the chart) and take profit at the price of 1.2584 (thicker green line on the chart). There is a chance for a rally today, but only in the morning. Nevertheless, note that when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.2497, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2532 and 1.2584.
For short positions:
Sell pound when the quote reaches 1.2497 (red line on the chart) and take profit at the price of 1.2447. Pressure will return in the afternoon, but subject to strong reports on the US economy. However, note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.2532, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2497 and 1.2447.
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.
