Analysis of transactions in the GBP / USD pair
The pair tested 1.2155 when the MACD line was already far from zero, so the upside potential was limited. Sometime later, another test took place, but this time the MACD line was declining from its highs, which was a good reason to buy. Surprisingly, it resulted in losses.
Ahead are reports on the UK's public sector net borrowing and retail sales, however, they will not have much effect on the market as trading volume and volatility are likely to be low due to the upcoming Christmas and New Year holidays. Most probably, GBP/USD will continue to trade in the channel it has been in since the end of last week.
The US consumer confidence index and secondary market housing sales could weaken dollar and strengthen pound if the data are beyond expectations. If they are the same, the pair will resume trading sideways.
For long positions:
Buy pound when the quote reaches 1.2187 (green line on the chart) and take profit at the price of 1.2270 (thicker green line on the chart). Growth will occur if there are weak US reports. 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 1.2135, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.2187 and 1.2270.
For short positions:
Sell pound when the quote reaches 1.2135 (red line on the chart) and take profit at the price of 1.2055. Pressure will return if there is no bullish activity at the weekly highs. 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 1.2187, however, the MACD line should be in the overbought area as only by that will the market reverse to 1.2135 and 1.2055.
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.