Analysis of transactions in the GBP / USD pair
The test of 1.1379 happened when the MACD line was far below zero, which should have limited the downside potential of the pair. However, the pair continued to fall, moving by over 60 pips. As for purchases after a rebound from 1.1324, they led to losses as pound continued to fall and lost about 200 more points.
The decision of the Bank of England put further pressure on pound as despite the rate hike to 3.0%, the statements given by the bank signal the gradual easing of measures to curb inflation.
Today, there is a report on activity in the construction section in the UK, followed by a speech from Bank of England member Huw Pill. Both are unlikely to help pound, so traders should pay closer attention on the data during the US trading session. The US will release reports on the unemployment rate and the change in the number of people employed in the non-farm sector, in which weak data will return risk appetite and hit the position of dollar. But if the reports turn out to be better than forecasts, another sell-off will be seen in GBP/USD.
For long positions:
Buy pound when the quote reaches 1.1242 (green line on the chart) and take profit at the price of 1.1326 (thicker green line on the chart). Growth will occur after very weak data on the US. But remember that when buying, the MACD line should be above zero or is starting to rise from it.
Pound can also be bought at 1.1204, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.1242 and 1.1326.
For short positions:
Sell pound when the quote reaches 1.1204 (red line on the chart) and take profit at the price of 1.1133. Pressure may return after strong reports from the US. But take note that when selling, the MACD line should be below zero or is starting to move down from it.
Pound can also be sold at 1.1242, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1204 and 1.1133.
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.
The material has been provided by InstaForex Company – www.instaforex.com
