Overview of trading and tips on GBP/USD
The price test of 1.2748 occurred at a time when the MACD indicator had sharply fallen from the zero mark, which limited the GBP/USD pair's potential to fall. Considering that the pound had declined significantly from the day's opening level, as well as the oversold condition and subsequent recovery of the MACD indicator when the price was tested, I decided to buy the pound in anticipation of a bullish correction by the end of the day, and I was right. As a result, the pair increased by about 30 pips. The price test of 1.2770 during the US session coincided with the start of the MACD's upward movement from the zero mark, which also brought an additional 20 pips to gain. Weak US labor market data was the main reason why the pair corrected sharply higher in the second half of the day.
Today, we expect important figures for the UK's services PMI and composite PMI. Take note that services account for up to 70% of the UK economy, so this report can be quite crucial. In case of weak figures, the pound could decline sharply. As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and 2.
Buy signals
Scenario No. 1. I plan to buy the pound today when GBP/USD reaches the entry point at 1.2785 plotted by the green line on the chart, aiming for growth to 1.2838 plotted by the thicker green line on the chart. In the area of 1.2838, I'm going to close long positions and open short ones in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). You can count on the pound's growth today only after very good PMI data. Before buying, make sure that the MACD indicator is above the zero mark and is just starting to rise from it.
Scenario No. 2. I also plan to buy the pound today in case of two consecutive tests of the price of 1.2761 at the time when the MACD indicator is in the oversold area. This will limit the downward potential of the instrument and lead to an upward reversal of the market. We can expect growth to the opposite levels of 1.2785 and 1.2838.
Sell signals
Scenario No. 1. I plan to sell the pound today after testing the level of 1.2761 (the red line on the chart), which will lead to a rapid decline in GBP/USD. The key target for sellers will be 1.2727, where I am going to close short positions and also open long positions in the opposite direction (expecting a movement of 20-25 pips in the upward direction from that level). You can sell the pound after the pair fails to consolidate near the daily high. Before selling, make sure that the MACD indicator is below the zero mark and is just starting to decline from it.
Scenario No. 2: I also plan to sell the pound today in case of two consecutive tests of 1.2785 at the time when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal of the market. We can expect a decline to the opposite level of 1.2761 and 1.2727.
What's on the chart:
The thin green line is the entry price at which you can buy the trading instrument.
The thick green line is the price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely.
The thin red line is the entry price at which you can sell the trading instrument.
The thick red line is the 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 in the cryptocurrency market need to be very cautious when making decisions to enter the market. It is best to stay out of the market before important fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade with large volumes.
Remember, for successful trading, it is necessary to have a clear trading plan, similar to the one I presented above. Spontaneously making trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.
