Analysis of transactions in the GBP / USD pair
GBP/USD reaching 1.2176 led to a sell signal in the market, but having the MACD line far from zero limited the downside potential of the pair. The second test, however, was successful because the MACD line was in the oversold area and the market signal was to buy. That led to a more than 40-pip increase in the pair. In the afternoon, the test of 1.2227 led to losses because the MACD line was again far from zero.
Pound hit new yearly lows after reports indicated that the UK economy contracted last March. The declining cost of living for households has forced spending to decrease, casting doubt on the Bank of England's ability to keep raising interest rates.
However, the pair may see a correction today as there are no UK statistics scheduled to be published. The upcoming report on US consumer sentiment is also likely to have a bad effect on the dollar, though it could be saved by the statements of FOMC members Neel Kashkari and Loretta Mester.
For long positions:
Buy pound when the quote reaches 1.2239 (green line on the chart) and take profit at the price of 1.2297 (thicker green line on the chart). There is a chance for a rally today, especially in the morning. But note that when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.2208, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2239 and 1.2297.
For short positions:
Sell pound when the quote reaches 1.2208 (red line on the chart) and take profit at the price of 1.2165. Pressure may return at any moment, especially if the upcoming US data exceeds expectations. But note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.2239, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.2208 and 1.2165.
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.