Analysis of transactions in the GBP / USD pair
Although the downside potential was limited because of the MACD line being on the oversold area, GBP/USD still fell from 1.3530 and hit 1.3490. That prompted a signal to buy in the market, but there was no upward movement despite the strong oversoldness of the indicator and the market as a whole.
Weak business activity in both manufacturing and services sectors of the UK heightened fears of an early rate hike by the Bank of England. Such an aggressive stance could hurt the economy, so demand for pound declined. In the afternoon, GBP/USD continued to fall despite similar disappointing data from the US.
Today, the UK will release a report on industrial orders, but that is unlikely to affect market direction. Meanwhile, in the afternoon, the US will publish data on manufacturing activity and house prices, followed by a report on consumer confidence, which is more important as it may lead to a drop in dollar demand. Markets will be cautious as ahead is another Fed meeting, so do not expect much activity, especially in risky assets. It is better to bet on dollar rather than pound
For long positions:
Buy pound when the quote reaches 1.3495 (green line on the chart) and take profit at the price of 1.3549 (thicker green line on the chart). The pair will grow further if the bulls manage to bring the pair above 1.3495.
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 1.3466, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.3495 and 1.3549.
For short positions:
Sell pound when the quote reaches 1.3466 (red line on the chart) and take profit at the price of 11.3414. The market may remain bearish ahead of the Fed meeting this Wednesday.
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 1.3495, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3466 and 1.3414.
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.