FX.co ★ Analysis and trading recommendations for GBP/USD on October 26

Analysis of transactions in the GBP / USD pair

There was a signal to sell in GBP / USD on Monday, but the decrease was limited because the MACD line was far away from zero. Fortunately, after that, another sell signal appeared, and this time it coincided with the MACD being at the overbought area. This allowed traders to take short positions, provoking a 20-pip decline in the pair. Then, in the afternoon, pound fell again by 20 pips, thanks to another signal to sell that coincided with the MACD line moving down from zero.

Bears repeatedly tried to break through the lower border of the side channel yesterday, but failed.

Data on UK retail sales is due this morning, but it is unlikely to affect the market. But in the afternoon, there will be reports on US consumer confidence and primary home sales, which could fuel demand for dollar if data exceed expectations. If this happens, GBP / USD will plunge to weekly lows.

For long positions:

Open a long position when pound reaches 1.3780 (green line on the chart) and take profit at 1.3820 (thicker green line on the chart). Only strong UK data could push the pair up. Otherwise, GBP / USD will remain in a flat market.

Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3754, but the MACD line should be in the oversold area, as only by that will the market reverse to 11.3780 and 1.3820.

For short positions:

Open a short position when pound reaches 1.3754 (red line on the chart) and take profit at 1.3716. Weak UK reports and strong US data will put pressure on the pair.

Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.3780, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3754 and 1.3716.

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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.