Analysis of transactions in the GBP / USD pair
The price test of 1.1010 happened when the MACD line was far below zero, which limited the downside potential of the pair. Sometime later, another test took place, but this time the MACD line was in the overbought area, which was a good reason to buy. It led to a rise and test of 1.1057, which coincided with the MACD line moving above zero, which was another reason to buy. Resultantly, the pair went up another 40 pips.
Sell-offs after the rebound from 1.1133 were unsuccessful.
Yesterday's data on UK wages, jobless claims and unemployment rate were mixed, so pound did not fall further against dollar. But the performance of Bank of England Governor Andrew Bailey led to a sell-off, all because of the announcement that the bond buying program, thanks to which pound is not yet trading near parity, may end on October 14.
A number of reports are scheduled to be released today, but they are unlikely to change the downward direction of the pair. At most, the data on UK GDP, industrial production and foreign trade balance will prompt a surge in volatility in the market. In the afternoon, there will be a report on US producer prices, as well as minutes of the Fed meeting. From there it will be clear what plan the politicians are following, or at least they believe that they will follow it. The aggressiveness of the protocol is a reason to increase dollar positions.
For long positions:
Buy pound when the quote reaches 1.1027 (green line on the chart) and take profit at the price of 1.1115 (thicker green line on the chart). Growth will occur as long as upcoming statistics exceed expectations. But remember that when buying, the MACD line should be above zero or is starting to rise from it.
Pound can also be bought at 1.0971, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.1027 and 1.1115.
For short positions:
Sell pound when the quote reaches 1.0971 (red line on the chart) and take profit at the price of 1.0882. Pressure will return if the attempt for rebound fails. But 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 1.1027, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0971 and 1.0882.
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.
