FX.co ★ Analysis and trading tips for GBP/USD on March 3

Analysis of transactions in the GBP / USD pair

A signal to sell emerged after GBP/USD hit 1.3286. However, there was no decrease because the MACD line being far from zero limited the downside potential of the pair. The second attempt was more successful as the signal to buy coincided with the MACD line being in the oversold area. During that time, traders were able to safely take long positions, prompting a 45-pip increase in the pair. In the afternoon, the pound reached 1.3329, but since the MACD was in the overbought area, the signal to sell led to losses.

The statements of Bank of England members Silvana Tenreyro and John Cunliffe did not cause serious changes in the market. But on Wednesday afternoon, volatility surged after Fed Chairman Jerome Powell backed a quarter-point rate hike this month to initiate policy tightening.

Several economic reports are scheduled for today, namely the service PMI and composite PMI of the UK. A rise in these indicators will prompt a rally in GBP/USD. In the afternoon, the US will release a report on jobless claims, followed by the data on business activity in the services sector. Growth in the latter indicator will be favorable for dollar.

For long positions:

Buy pound when the quote reaches 1.3414 (green line on the chart) and take profit at the price of 1.3443 (thicker green line on the chart). Strong economic reports in the Euro area may provoke a rise in GBP/USD. But 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 1.3385, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.3414 and 1.3443.

For short positions:

Sell pound when the quote reaches 1.3385 (red line on the chart) and take profit at the price of 1.3352. The ongoing conflict in Ukraine is a bearish signal to risky assets, but 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 1.3414, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.3385 and 1.3352.

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.