Analysis of transactions and tips for trading GBP/USD
The pair tested 1.2176 at a time when the MACD line was far from zero, which limited the upside potential of the pair. Sometime later, there was another test, but this time the MACD line was in the overbought area, giving off a signal to sell. This resulted in a price decrease of about 30 pips.
Pound rose on Tuesday morning as the good UK labor market data caused demand to increase. However, GBP/USD still failed to get out of the sideways channel, even after the release of the US CPI report for February, which showed a decline.
Today, traders should pay attention not to get into the market before the UK releases its latest budget report as the reaction could be quite unpredictable. In the afternoon, the US is set to publish its February data on retail sales, which will most likely give the Federal Reserve the final say on how to deal with the committee's meeting later this month. There will also be data on the producer price index and the Empire Manufacturing index, but it will be of little importance. Even so, dollar will be on a more stronger position than pound.
For long positions:
Buy pound when the quote reaches 1.2165 (green line on the chart) and take profit at the price of 1.2218 (thicker green line on the chart). Growth is possible if traders react positively to the upcoming yearly budget report. However, when buying, make sure that the MACD line is above zero or is starting to rise from it. Pound can also be bought at 1.2131, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2165 and 1.2218.
For short positions:
Sell pound when the quote reaches 1.2131(red line on the chart) and take profit at the price of 1.2091. Pressure may return if the US reports better-than-expected economic figures. 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 1.2165, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2131 and 1.2091.
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.
