FX.co ★ Analysis and trading recommendations for GBP/USD on November 5

Analysis of transactions in the GBP / USD pair

GBP / USD fell by 30 pips on Thursday morning because many traders took short positions amid a signal to sell that coincided with the MACD line moving to zero. Then, in the afternoon, another decline occurred, making the downward movement amount to more than 100 pips.

Pound may continue to decline this morning because Bank of England members, such as Silvana Tenreyro and David Ramsden, will talk about further plans on the monetary policy. Then, the downward momentum may escalate if the US reports strong labor market data in the afternoon.

For long positions:

Open a long position when pound reaches 1.3516 (green line on the chart) and take profit at 1.3566 (thicker green line on the chart). Growth will be observed if the Bank of England hints at potential changes in its monetary policy.

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 1.3487, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3516 and 1.3566.

For short positions:

Sell pound when the quote reaches 1.3487 (red line on the chart) and take profit at the price of 1.3592. The decline will continue if the Bank of England insists on adhering to a soft monetary policy. Strong data on the US labor market will also push GBP / USD down.

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 1.3516, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3487 and 1.3435.

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.