Analysis of transactions in the GBP / USD pair
GBP / USD fell by 20 pips on Wednesday because traders took short positions amid a signal to sell that appeared at a time when the MACD line was in the overbought area. After that, another signal emerged, but this time the downward movement was limited because the indicator had gone far away from zero. It was only in the afternoon that the pair declined again, more specifically when the MACD line began to move below zero. The drop to roughly 30 pips.
Pound rose yesterday as all the released UK data exceeded expectations. But in the afternoon it declined again because the strong Q3 GDP and jobless claims report in the US brought demand back to dollar. The recent Fed minutes also provided support to USD as the contents hint at potential policy tapering in the near future.
GBP / USD has a chance to increase today because there are no scheduled statistics from the UK. In the afternoon, volatility and trading volume will decline sharply, all because of the closure of the US market in connection with the celebration of Thanksgiving Day.
For long positions:
Buy pound when the quote reaches 1.3360 (green line on the chart) and take profit at the price of 1.3398 (thicker green line on the chart). An increase may be observed as there are no UK statistics scheduled to be released.
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 1.3332, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3360 and 1.3398.
For short positions:
Sell pound when the quote reaches 1.3332 (red line on the chart) and take profit at the price of 1.3290. A decline will occur in the event of a failed attempt to rise above 1.3360 and dovish statements from Bank of England Governor Andrew Bailey.
Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.3360, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3332 and 1.3290.
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.