Analysis of transactions in the GBP / USD pair
The test of 1.2385 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 just starting to move above zero, which was a good reason to buy. This resulted in a price increase of over 60 pips. No other signals appeared for the rest of the day.
A slowdown in the UK consumer price index put temporary pressure on pound, limiting GBP/USD's gains yesterday morning. Then, the Fed surprised markets with its policy decision, so pressure remained during the US session, preventing players from reaching new December highs. Now, many are anticipating whether the Bank of England will follow this hawkish decision, or hint at a less aggressive move in the future. The latter will certainly put further pressure on pound.
Also this afternoon is the release of reports on retail sales, weekly jobless and industrial output in the US. The retail sales report is likely to be the main determinant of the market's direction for the rest of the week. A rise in sales will push dollar up, resulting in a further decline in EUR/USD.
For long positions:
Buy pound when the quote reaches 1.2421 (green line on the chart) and take profit at the price of 1.2490 (thicker green line on the chart). Growth will occur only when the Bank of England remains hawkish on its monetary policy. 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 1.2374, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.2421 and 1.2490.
For short positions:
Sell pound when the quote reaches 1.2374 (red line on the chart) and take profit at the price of 1.2293. Pressure will return if the Bank of England says dovish 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 1.2421, however, the MACD line should be in the overbought area as only by that will the market reverse to 1.2374 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.
