Analysis of transactions in the GBP / USD pair
A signal to buy appeared in the market yesterday afternoon, and it coincided with the MACD line being at the oversold area. This limited the downward potential of GBP / USD and provoked a 20-pip rise in the pair. There were no other market signals for the rest of the day.
Recently-released data on UK manufacturing orders encouraged pound bulls, but did not manage to set off a large upward correction. Most probably, the reason was the surge in public debt, which is to £ 20.5 billion.
The market will move today depending on the policy decision of the Federal Reserve, as well as the economic forecast and press conference by Fed Chairman Jerome Powell. All those will create a lot of noise in the financial markets, which will lead to a surge in volatility. If the central bank announces an earlier-than-scheduled cut in bond purchases, dollar will rise very sharply.
For long positions:
Open a long position when pound reaches 1.3679 (green line on the chart) and take profit at the level of 1.3743 (thicker green line on the chart). However, there is little chance that the pair will climb higher today because there are no important statistics scheduled for release, not to mention the market is in a downward trend. In any case, before buying, make sure that the MACD line is above zero, or is starting to rise from it.
It is also possible to buy at 1.3634, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3679 and 1.3743.
For short positions:
Open a short position when pound reaches 1.3634 (red line on the chart) and take profit at the level of 1.3575. The pair should remain in a bear market since the decision of the Fed is likely to support dollar. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.
The pair could also be sold at 1.3679, but the MACD line should be in the overbought area as only by that will the market reverse to 1.3634 and 1.3575.
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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.