Analysis of transactions and tips for trading GBP/USD
The test of 1.2034 occurred when the MACD line was in the oversold area, so there was no reason to sell. Sometime later, another test took place, but this time it was at 1.1945 and the MACD line had just started to climb above zero. It was a good signal to buy and has led to a price increase of over 60 pips.
UK manufacturing PMI for February this year will indicate the state of the sector, which could affect pound's volatility. The speech of Bank of England Governor Andrew Bailey will also affect the price movement. Meanwhile, reports on the number of approved mortgage applications and the volume of net loans to individuals in the UK are of little importance to the market
The US ISM manufacturing index report comes out in the afternoon, which is certain to stay below 50 points. However, given how GBP/USD reacted to the negative statistics yesterday, it is quite hard to know what the reaction to the ISM data will be. FOMC member Neel Kashkari's speech will probably not be much different from his colleagues' statements.
For long positions:
Buy pound when the quote reaches 1.2076 (green line on the chart) and take profit at the price of 1.2134 (thicker green line on the chart). Growth is possible; however, it will only be after strong PMI data and hawkish statements from the Bank of England . Nevertheless, make sure that when buying, the MACD line is above zero or is starting to rise from it. Pound can also be bought at 1.2037, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2076 and 1.2134.
For short positions:
Sell pound when the quote reaches 1.2037 (red line on the chart) and take profit at the price of 1.1981. Pressure will return if the UK reports weak data and dim outlook for the economy. However, 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 1.2076, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2037 and 1.1981.
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.
