Analysis of transactions in the GBP / USD pair
Although pound rose all throughout the day, long positions in the market were unprofitable because the MACD line was at the overbought area, which significantly limited the upward potential of the pair.
In any case, pound rallied on Thursday because the Bank of England said any tightening should start with an interest rate hike, even if that looks impractical since the bond purchase program will not be completed until the end of this year. But two of the nine members pushed for an early end to all purchases.
In the US, the Department of Labor released a report saying jobless claims rose for two consecutive weeks, putting pressure on dollar.
Today, there will be a report on UK retail sales, followed by speeches from Bank of England members. Both could provoke a surge in demand, which, in turn, will lead to a rise in GBP / USD. This may continue in the afternoon if the speech of Fed Chairman Jerome Powell is not hawkish. There will also be data on US home sales in the primary market.
For long positions:
Open a long position when pound reaches 1.3731 (green line on the chart) and take profit at the level of 1.3769 (thicker green line on the chart). The pair will climb higher if there are good economic data from UK. But 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 1.3705, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3731 and 1.3769.
For short positions:
Open a short position when pound reaches 1.3705 (red line on the chart) and take profit at the level of 1.3657. The market will be bearish again if Bank of England representatives deliver ambiguous statements over monetary policy. 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 1.3731, but the MACD line should be in the overbought area as only by that will the market reverse to 1.3705 and 1.3657.
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.