Analysis of transactions in the GBP / USD pair
GBP/USD tested 1.2045. At that time, the MACD line was far from zero, so the downside potential was limited. Sometime later, the pair tested the level again, but this time the MACD line was already out of the oversold area, which is a good signal to buy. Unfortunately, there was no price increase, leading to losses. Long positions around 1.1999 were also unsuccessful because the pair did not stay there for a long time.
The data on UK retail sales did not prevent pound from correcting yesterday morning in anticipation of the Fed meeting scheduled for today. But it slightly rose during the US session amid a decrease in the level of consumer confidence in the US.
Ahead is a report on retail prices in the UK, followed by the Fed meeting and announcement of its decision on interest rates. An aggressive increase in the cost of borrowing will lead to dollar purchases and GBP/USD's further decline, but if the committee does not report anything new, demand for pound will return. Markets will also pay attention to the foreign trade balance in the US and data on durable goods.
For long positions:
Buy pound when the quote reaches 1.2076 (green line on the chart) and take profit at the price of 1.2116 (thicker green line on the chart). There is a chance for a rally today, but only if the pair stays above 1.2045.
Take note that when buying, the MACD line should be above zero or is starting to rise from it. It is also possible to buy at 1.2045, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2076 and 1.2116.
For short positions:
Sell pound when the quote reaches 1.2045 (red line on the chart) and take profit at the price of 1.1999. Pressure will return if the Federal Reserves takes more aggressive approach on monetary policy.
Take note that when selling, the MACD line should be below zero or is starting to move down from it. Pound can also be sold at 1.2076, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2045 and 1.1999.
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 decision based on the current market situation is an inherently losing strategy for an intraday trader.
