Overview of trading on Friday and trading tips
The level of 1.1908 was tested at the moment when the MACD indicator had begun its upwardmove from the zero level. It seems to be a good excuse to go long on GBP. The buying idea was ruined by the data from the UK that was worse than expected. Hence, the buyers' stop losses were activated. After a sharp plunge of GBP/USD, the level of 1.1951 was tested at the time when the MACD indicator had started its downward move from the zero level. This confirmed that the point was picked right for selling the currency pair. All in all, the price moved 30 pips downward andstopped. GBP/USD did not generate other trading signals afterwards.
When it comes to fundamentals, investors were disappointed a UK manufacturing PMI, servicesPMI, and composite PMIs. Weaker-than-expected data triggered sell-offs of the sterling. However, in the second half of the day, the US also released downbeat economic data that offset the bullish and bearish forces. So, the bulls managed to push the price to weekly highs. Today the economic calendar is empty for the UK. The report on industrial trends orders by the Confederation of the British Industry is likely to be neglected by the market. In the second half of the day, the US will not release any metrics. Therefore, the market is expected to cool down and GBP/USD will close with a correction as it did on Friday. I project the pair to stay inside the trading range. I would advise you to consider scenario No 2.
Buy signals
Scenario 1. Buy GBP today as soon as the price reaches the market entry point at 1.1980 (the thingreen line on the chart) with the upward target at 1.2039 plotted by the thick green line on the chart. I would recommend exiting sell positions at about 1.2039 and opening sell positions in the opposite direction reckoning the downward move of 30-35 pips from the above-said level. We could assume growth of GBP in the first half of the day amid the lack of macroeconomic data like it was on Friday. Importantly, before buying GBP, make sure the MACD indicator stays above the zero level, beginning its climb.
Scenario 2. Buy GBP today on the condition the price reaches 1.1948. However, the MACD indicator should be in the oversold area which will limit the bullish potential of the pair and will lead to the market reversal in the opposite direction. We may reckon GBP's growth to 1.1908 and 1.2039.
Sell signals
Scenario 1. Sell GBP only after the level of 1.1948 is updated (the red line on the chart). Asconsequence, GBP/USD will develop a rapid fall. The key level of the sellers will be 1.1902 where I recommend exiting sell positions as well as opening buy positions in the opposite direction, bearing in mind a move of 20-25 pips in the opposite direction from the above-said level. The sterling will come under pressure again in case the FOMC toughen its hawkish rhetoric on monetary policy. Importantly, before selling GBP/USD, make sure the MACD indicator is below the zero line, beginning its decline from it.
Scenario 2.
Besides, sell GBP today in case the price reached 1.1980. However, the MACD indicator should stay in the overbought area which will restrict the upside potential of the pair and make the market reverse downward. We could expect a decline to the opposite levels of 1.1948 and 1.1902.
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 price 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 price is unlikely to move below this level.
MACD line. When entering the market, it is important to adjust trading decisions to 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 avoidtrading during sharp fluctuations in market quotes. 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.
Remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation will inevitably lead to losses for an intraday trader.