Analysis of transactions and tips for trading GBP/USD
The test of 1.2020 occurred when the MACD line was far from zero, so the downside potential was limited. No other market signal appeared for the rest of the day.
UK's activity data on its construction section did not help pound rise even though the data was quite bearable. As for today, there is a house price index ahead, followed by a speech from Bank of England Deputy Governor Sam Woods. However, both are likely to be ignored as more important is the speech of Fed Chairman Jerome Powell in the afternoon. His tone will determine the further direction of GBP/USD. A tough stance against inflation will bring back demand for dollar, causing the pair to fall.
For long positions:
Buy pound when the quote reaches 1.2048 (green line on the chart) and take profit at the price of 1.2088 (thicker green line on the chart). Growth is possible after the breakdown of weekly highs. However, make sure that when buying, the MACD line is above zero or is starting to rise from it. Pound can also be bought at 1.2028, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2048 and 1.2088.
For short positions:
Sell pound when the quote reaches 1.2028 (red line on the chart) and take profit at the price of 1.1995. Pressure will return if the Federal Reserve says hawkish statements today. 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 1.2048, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2028 and 1.1985.
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.