Analysis of transactions in the GBP / USD pair
The test of 1.1592 happened when the MACD line was far below zero, which limited the downside potential of the pair. Some time later, another test took place, but this time the MACD line was already recovering from the oversold area, which was a good reason to buy. This led to a price increase of about 15 pips. No other signals appeared for the rest of the day.
The UK retail sales report and strong US GDP data did not affect pound yesterday. It remained trading in a horizontal channel, moving down only today during the European session, when pressure returned in the market.
There is nothing scheduled to be released in the UK today, so traders should observe the movement around 1.1527. In the afternoon, quite important indicators will be published in the US, namely the changes in the level of income and expenses, and the volume of pending home sales. If the data shows a decrease, expect a significant change in US GDP.
For long positions:
Buy pound when the quote reaches 1.1564 (green line on the chart) and take profit at the price of 1.1620 (thicker green line on the chart). Growth may occur in accordance with the newly formed trend. 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 1.1527, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.1564 and 1.1620.
For short positions:
Sell pound when the quote reaches 1.1527 (red line on the chart) and take profit at the price of 1.1483. Pressure will return if the US reports strong economic data. 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 1.1636, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1592 and 1.1543.
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