Analysis of transactions in the GBP / USD pair
The test of 1.2286 occurred at a time when the MACD line was far away from zero, which limited the upside potential of the pair. After a while, there was another test, but this time the MACD line was in the overbought area, so pound fell by over 40 pips. However, the third test of the level offset the downward movement as it happened when the MACD line had just started its climb above zero, which was a good reason to buy. It led to a price increase of more than 200 pips.
A slowdown in the US consumer price index led to a sharp rise in pound. However, the situation could change today as UK consumer price index and house price index reports are due out in the morning. Lower prices will prompt a decline in the pound as it will allow the Bank of England to conduct a less aggressive monetary policy. In the afternoon, the US will release some statistics, followed by the announcement of the Fed's decision on interest rates. The economic outlook of the central bank will also play a very important role as Fed Chairman Jerome Powell is likely to discuss the plans for next year, making a couple of hints on how the Fed is going to proceed with a further slowdown in price growth. A dovish rhetoric could lead to another rise in pound and a fall in dollar.
For long positions:
Buy pound when the quote reaches 1.2385 (green line on the chart) and take profit at the price of 1.2445 (thicker green line on the chart). Growth could resume in accordance with the newly formed trend. 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 1.2351, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.2385 and 1.2445.
For short positions:
Sell pound when the quote reaches 1.2351 (red line on the chart) and take profit at the price of 1.2293. Pressure will return if the Fed says hawkish statements regarding monetary policy. 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 1.2385, however, the MACD line should be in the overbought area as only by that will the market reverse to 1.2351 and 1.2293.
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.
