Analysis of transactions in the GBP/USD pair:
The level of 1.3434 was first tested this morning. At the time of updating the level, the MACD indicator was just starting to rise from zero, which confirmed the correct entry point for buying the pound, although the deal was against the trend. The upward movement was about 13 points and then the buyers' initiative ended. Towards the afternoon, the pound declined, but testing the level of 1.3407 took place when the MACD had already further fell quite far from the zero mark, which limited the pair's downward potential. There was no signal to sell. A repeated test of 1.3434 and the MACD will confirm the entry point – an increase of 15 points and a market reversal.
The US data limited the pound's potential to rise, which did not allow the buyers to build a larger upward correction, keeping the market in sellers' control. Today, much will depend on the UK manufacturing PMI index, which can help buyers break above the large level of 1.1250 and will lead to forming a strong growth. There are no important statistics during the US session, so the focus will shift to a similar ISM manufacturing index and the level of vacancies and labor turnover from the US Bureau of Labor Statistics. It is unlikely that the data will change the balance of power in the market. If we see the growth of GBP/USD in the morning, we can safely assume that the upward movement will continue during the US session – the closer the meeting of the Bank of England, the more attractive the British pound will be.
For long positions:
Buy the pound when the price reaches the entry point around 1.3457 (green line on the chart) with the goal of rising to the level of 1.3495 (thicker green line on the chart), from which it is recommended to leave purchases and open sales in the opposite direction (calculation for a movement of 15-20 points in the opposite direction from the level). The pound's growth in the morning is only possible after good statistics on PMI. Before buying, be certain that the MACD indicator is above zero and is just starting to rise from it.
It is also possible to buy the pound if the price reaches the level of 1.3439, but the MACD indicator should be in the oversold area at this point, which will limit the pair's downside potential and lead to an upward reversal in the market. Growth can be expected to the opposite levels of 1.3457 and 1.3495.
For short positions:
Sell the pound only after updating the level of 1.3439 (red line on the chart), which will lead to the pair's immediate fall. The key target for the sellers will be the level of 1.3403, where it is recommended to leave sales and open purchases immediately in the opposite direction (calculation for a movement of 15-20 points in the opposite direction from the level). The pound will be under pressure again in case of weak buying activity and disappointing statistics on the manufacturing index. Before selling, be certain that the MACD indicator is below zero and is just starting to decline from it.
It is also possible to sell the pound if the price reaches the level of 1.3457, but the MACD indicator should be in the overbought area at this point, which will limit the pair's upward potential and lead to a downward reversal in the market. A decline can be expected to the opposite levels of 1.3439 and 1.3403.
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.
It is important to note that 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, your entire deposit can be lost immediately, especially if you do not use money management and trade large volumes.
Remember: a clear trading plan is necessary to succeed in trading. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.