Analysis of transactions and tips for trading GBP/USD
The test of 1.2140 occurred when the MACD line was just starting to move below zero, which was a pretty good signal to sell. It led to a price decrease of over 60 pips. Meanwhile, buying on a rebound from 1.2080 gave a 20-pip correction.
GBP/USD fell on Wednesday as UK inflation data showed a stronger than expected slowdown in price growth. The good figure led to a large sell-off in the market.
There is nothing that will positively affect the pair today, so it is best to stick to selling as long as the price remains below 1.2050. Missing this level could start an active rise in the pair.
There are a lot of reports coming out in the afternoon, such as the number of building permits and new foundations, which will show the state of one of the most important sectors in the economy. Meanwhile, the weekly jobless claims, producer price index and the Philadelphia Fed manufacturing index will not affect the market much; however, in case the data turns out to be better than expected, another strengthening in dollar and fall in pound will be seen.
For long positions:
Buy pound when the quote reaches 1.2052 (green line on the chart) and take profit at the price of 1.2119 (thicker green line on the chart). Growth will be possible, and this will continue the correction. However, when buying, make sure that the MACD line is above zero or is starting to rise from it. Pound can be bought at 1.2017, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2052 and 1.2119.
For short positions:
Sell pound when the quote reaches 1.2017 (red line on the chart) and take profit at the price of 1.1961. Pressure will return if economic data in the US exceeds expectations. 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 1.2052, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2017 and 1.1961.
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.