Analysis of transactions in the GBP / USD pair
The price test of 1.1343 occurred at the moment when the MACD line was far from zero, so the upside potential was limited. Sales, meanwhile, brought more than 50 points of profit. No other signals appeared for the rest of the day.
The UK's abandonment of the tax cut plan calmed investors' nerves over the government's financial health, but doubts about the pound's outlook remained. And although the active intervention of the Bank of England continues to support the currency, demand may decrease at any moment, so be careful when buying at current levels.
A lot of reports are scheduled to be released today, such as business activity index in the services sector and composite PMI in the UK. Weak data could hurt bullish sentiment, which will lead to a fall in the pound in the morning. By afternoon, similar reports from the US will be published, followed by employment data from the ADP, report on foreign trade balance and a speech from FOMC member Raphael Bostic. If all these are better than expected, demand for the dollar will climb further, which will offset the recent losses against the pound.
For long positions:
Buy pound when the quote reaches 1.1473 (green line on the chart) and take profit at the price of 1.1546 (thicker green line on the chart). Growth will occur, but it will stop as soon as negative data appears. Nevertheless, traders could buy as long as the MACD line is above zero or is starting to rise from it.
Pound can also be bought at 1.1420, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1473 and 1.1546.
For short positions:
Sell pound when the quote reaches 1.1420 (red line on the chart) and take profit at the price of 1.1335. Pressure will return in case of weak statistics and a decrease in risk appetite. But take note that when selling, the MACD line should be below zero or is starting to move down from it.
Pound can also be sold at 1.1473, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1420 and 1.1335.
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.