Analysis of transactions in the GBP / USD pair
GBP/USD reaching 1.2257 prompted a sell signal in the market, however, having the MACD line far from zero limited the downside potential of the pair. Some time later, the pair went to 1.2286, forming a buy signal. This time, the MACD line was moving above zero, so the pair rose by 20 pips. The level was tested again in the afternoon, causing another 25 pip increase. No other signal appeared for the rest of the day.
GBP/USD continued to decline last Friday because UK reported a decline in its retail sales for May. The reason was rising food prices, which points to a wider crisis in the cost of living. Such a situation forced consumers to cut back on spending, similar to what happened during the peak of the coronavirus pandemic. In the US, consumer expectations and sentiment also declined, putting slight pressure on the dollar. The report on new home sales was not good as well.
There is nothing interesting in the UK today, so the pair will remain in the horizontal channel. But in the afternoon, there may be a turn around as the US will publish data on orders for durable goods and pending sales in the real estate market. A decrease in these indicators will increase pressure on the dollar, but the market will still have low volatility.
For long positions:
Buy pound when the quote reaches 1.2288 (green line on the chart) and take profit at the price of 1.2335 (thicker green line on the chart). There is little chance for a rally today, but a breakdown of 1.2288 may change the situation. In any case, remember that when buying, the MACD line should be above zero, or is starting to rise from it. It is also possible to buy at 1.2252, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2288 and 1.2335.
For short positions:
Sell pound when the quote reaches 1.2252 (red line on the chart) and take profit at the price of 1.2199. Pressure will return if there is no bullish activity this morning. However, 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 1.2288, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2252 and 1.2199.
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.