Analysis of transactions in the GBP / USD pair
GBP/USD tested 1.1906 on Monday. At that time, the MACD line had just started to move above zero, so buying was appropriate. The long positions led in a price increase of around 30 pips. Meanwhile, sellers were expecting that euro will approach 1.1942, but before reaching it, pound stopped rallying and there was a downward correction. No other signals appeared for the rest of the day.
Although there was growth, Rightmove's housing price report did not affect the pound in any way. Similarly, the speech of MPC member Michael Saunders was ignored by the market, most likely because many no longer believe that the Fed will go for a 1.0% rate hike immediately.
Ahead is the release of data on the UK labor market, that is, the number of jobless claims and unemployment rate. But much more important is the report on average wage, which could prompt an even greater inflationary pressure. In the afternoon, the US will release data on the number of building permits issued and the volume of construction of new homes. The two are unlikely to affect the market significantly, but could lead to a surge in volatility, which will be used by speculative traders.
For long positions:
Buy pound when the quote reaches 1.1993 (green line on the chart) and take profit at the price of 1.2045 (thicker green line on the chart). There is a huge chance that the correction that started last week will continue today. However, when buying, traders should make sure that the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.1949, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1993 and 1.2045.
For short positions:
Sell pound when the quote reaches 1.1949 (red line on the chart) and take profit at the price of 1.1898. Pressure will return if there is no bullish activity of buyer around weekly highs. 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 1.1993, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1949 and 1.1898.
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.