The test of 1.2429 coincided with the time when the MACD line was just starting to move down from zero, which was a signal to sell. Accordingly, pound fell by about 50 pips.
The decline in UK inflation, which was interpreted by some traders as a signal of a more accommodative future policy by the Bank of England, together with risk aversion due to the lack of progress in US government debt negotiations, led to a fall in GBP/USD yesterday. The downward momentum will continue if US Finance Minister Janet Yellen mentions again the approaching default in the US. The speech of FOMC member Christopher Waller and the Fed's minutes have little chance of impacting the market.
For long positions:
Buy pound when the quote reaches 1.2404 (green line on the chart) and take profit at the price of 1.2458 (thicker green line on the chart). Growth is likely to occur amid positive news related to US government debt. However, before buying, make sure that the MACD line is above zero and is starting to rise from it. Pound can also be bought after the level of 1.2375 is tested twice, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2404 and 1.2458.
For short positions:
Sell pound when the quote reaches 1.2375 (red line on the chart) and take profit at the price of 1.2335. Pressure may continue without significant fundamental reasons. However, before selling, make sure that the MACD line is below zero and is starting to drop down from it. Pound can also be sold after the level of 1.2404 is tested twice, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2375 and 1.2335.
What's on the chart:
Thin green line - entry price at which you can buy GBP/USD
Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely.
Thin red line - entry price at which you can sell GBP/USD
Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely.
MACD line- it is important to be guided by overbought and oversold areas when entering the market
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.
