Analysis and tips on how to trade GBP/USD
The ISM services PMI that came below forecasts boosted the pound sterling yesterday. The macroeconomic calendar of the UK is empty today. Buyers will likely push the pair further up. If the UK construction PMI comes upbeat, GBP/USD will extend the uptrend, and I will open long positions according to Scenario 1. I will focus on a fall from 1.2426 to use Scenario 2 in the first half of the day.
Signal to buy:
Scenario 1: I will buy today after the price reaches 1.2456 (green line of the chart), targeting 1.2499 (thicker green line). I will close long positions in the area of 1.2499 and open short ones, allowing a correction of 30-35 pips in the opposite direction from the level. Growth may extend. Important! Before buying the instrument, make sure the MACD is above zero and just starts moving up from this level.
Scenario 2: I will also buy after the price tests the mark of 1.2426 twice, with the MACD being in the oversold zone at that moment. This will limit the pair's downside potential and lead to a bullish reversal in the market. The quote may go either to 1.2456 or 1.2499.
Signal to sell
Scenario 1: I will sell today after the price tests the mark of 1.2426 (red line on the chart), which will cause a rapid fall in value. The bearish target is seen at 1.2380 where I will close short positions and buy the instrument, allowing a correction of 20-25 pips in the opposite direction from the mark. The pair may feel pressure if the UK construction PMI comes worse than expected. Important! Before selling the instrument, make sure the MACD is below zero and just starts moving down from this level.
Scenario 2: I will also sell the instrument after the price tests the mark of 1.2456 twice, with the MACD being in the overbought zone at that moment. This will limit the pair's upside potential and lead to a bearish reversal in the market. The quote may then go either to 1.2426 or 1.2380.
Indicators on charts:
A thin green line indicates a buy entry point.
A thick green line is the estimated price level where you should place a take-profit order or close positions manually since the quote is unlikely to grow above this level.
A thin red line indicates a sell entry point.
A thick red line is the estimated price level where you should place a take-profit order or close positions manually since the quote is unlikely to fall below this level.
MACD. When entering the market, it is important to pay attention to the overbought and oversold zones.
Remember that novice forex traders should be very careful when deciding to enter the market. Before the release of important fundamentals, you should stay out of the market in order to avoid sharp fluctuations in the rate. If you decide to trade during news releases, make sure always to place a stop-loss order to minimize losses. Without it, you may quickly lose your entire deposit, especially if you do not use money management but trade large volumes.
Remember that in order to succeed in the market, you should have a clear trading plan, like the one I presented above. Spontaneous decisions based on the current state of the market are a losing strategy for an intraday trader.
