Analysis of transactions in the GBP / USD pair
The price test of 1.0971 happened when the MACD line was just starting to move below zero, which was a good reason to sell. Sadly, there was no price decrease, resulting in losses. The pair also bounced up and tested 1.1027, during which the MACD line was moving above zero. This was a good signal to buy, and resulted in a further upward movement of about 60 pips. This rise offset the losses that were seen earlier.
GBP/USD fell on Wednesday after reports indicated that UK GDP and industrial production fell sharply. Meanwhile, growth was seen in the US producer price index, but traders ignored it as they are expecting further support from the Bank of England for the bond market.
There is nothing interesting in the UK today, except for the report on lending conditions. The presentation of Bank of England MPC member Katherine L. Mann will not be of great interest. In the afternoon, CPI data in the US will set the direction of the market, especially if the indicator shows that US inflation continues to increase. This could lead to pound returning to yearly lows. But if inflation is reduced, risk appetite will surge, which will open the way to fairly large resistance. The jobless claims report for the US will not play any role in the market.
For long positions:
Buy pound when the quote reaches 1.1100 (green line on the chart) and take profit at the price of 1.1196 (thicker green line on the chart). Growth will occur as long as inflation in the US decreases, or if the Bank of England to continues the program of buying bonds. But remember that when buying, the MACD line should be above zero or is starting to rise from it.
Pound can also be bought at 1.1056, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.1100 and 1.1196.
For short positions:
Sell pound when the quote reaches 1.1056 (red line on the chart) and take profit at the price of 1.0977. Pressure will return if reports indicate that US inflation continues to rise. 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 1.1100, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1056 and 1.0977.
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.