Analysis of transactions and tips for trading GBP/USD
The test of 1.2505 in the morning coincided with the time that the MACD line was already far from zero, so the upward potential was limited. Meanwhile, the test of 1.2523 in the afternoon happened when the MACD line had just started to move up from zero, so there was a price increase of over 40 pips.
Pound continued to rise even after the Fed announced another increase in interest rates. Perhaps, this is because market players did not consider Fed Chairman Jerome Powell's speech as aggressive even though he did not hint at any pause in the rate hike cycle.
The rally may extend today as ahead is good PMI data from the UK, followed by a better-than-expected number of approved mortgage applications. In the afternoon, there will be reports on jobless claims and foreign trade balance in the US, but considering that the market ignored strong data yesterday, it is unlikely that the two will affect the direction of GBP/USD.
For long positions:
Buy pound when the level of 1.2593 (green line on the chart) is reached and take profit at the price of 1.2648 (thicker green line on the chart). Growth could occur, especially in the morning. However, before buying, make sure that the MACD line is above zero or is starting to rise from it. Pound can also be bought after two consecutive price tests of 1.2552, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2593 and 1.2648.
For short positions:
Sell pound when the level of 1.2552 (red line on the chart) is reached and take profit at the price of 1.2505. Pressure will return if the attempt to consolidate at the monthly highs fail. However, make sure that before selling, the MACD line is below zero or is starting to move down from it. Pound can also be sold after two consecutive price tests of 1.2593, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2552 and 1.2505.
What's on the chart:
Thin green line - entry price at which you can buy GBP/USD
Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely.
Thin red line - entry price at which you can sell GBP/USD
Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely.
MACD line- it is important to be guided by overbought and oversold areas when entering the market
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.