FX.co ★ Tips for beginners on trading GBP/USD, April 8; analysis of yesterday trades

Analysis of trades and trading tips for GBP

Yesterday, the pound sterling traded rather sluggishly. Given a surge in volatility in the first half of the day, it was difficult to determine a good entry point into long positions. The price made an attempt to break through 1.3095 at a time when the MACD indicator had risen significantly from the zero mark. It limited the upward potential of the pair. For this reason, I did not enter the market. Closer to the middle of the day, the price tried to break 1.3068 several times. However, at each attempt to break this range, the MACD indicator was far enough from the zero mark. In my opinion. it limited the downward potential of the pair. Taking into account that the 1.3069 level is an important support level, I was reluctant to enter the market

The macroeconomic calendar was completely empty yesterday. It affected the trajectory of the pound sterling. As seen on the chart, the number of traders who are willing to sell a trading instrument at current lows is too small. This is why bears are unable to take control. I do not exclude that today the pair will continue trading in the sideways channel where it has been within the week. As expected, speculators ignored the release of the UK House Price Index (HBOS). Hugh Peel, the BoE policymaker, did not tell us anything new in his speech. The speeches of FOMC members, on the contrary, were hawkish. It exerted pressure on the pound/dollar pair in the afternoon. Today, there will be also no crucial economic reports. This is why the pair is likely to remain in the sideways channel. In the second half of the day, US warehouses data is on tap. Yet, the report is of least importance to market participants. At the same time, the US dollar maintains its bull run amid geopolitical tensions.

Buy signal

Scenario No.1: it is recommended to open long positions on the pound sterling today when the price reaches 1.3082 (green line on the chart) with an upward target of 1.3129 (thicker green line on the chart). I would advise closing long positions at 1.3129 and opening short ones, keeping in mind a 20-25 correction in the opposite direction from the given level. The British currency may advance in the first half after a small rebound. It may occur after another unsuccessful attempt to break below the lower boundary of the sideways channel. Important! Before opening long positions, make sure that the MACD indicator is above the zero mark and it has just started to rise from this level.

Scenario No.2: it is also possible to buy the pound sterling today if the price approaches 1.3054. At this moment, the MACD indicator should be in the oversold area, which will limit the pair's downward potential. It may also trigger an upward reversal. The pair is expected to grow to the opposite levels of 1.3082 and 1.3129.

Sell signal

Scenario No.1: it is recommended to open short positions on the pound sterling today only after the price hits 1.3054 (the red line on the chart). If so, the pair will decline rapidly. The key target level will be 1.3026. I would advise closing short positions at this level and opening long ones, keeping in mind a 20-25 pip correction in the opposite direction from the given level. A breakout of weekly lows could lead to a major drop in the pound sterling and a resumption of the downward movement. Important! Before opening short positions, make sure that the MACD indicator is below the zero mark and it has just started to decline from this level.

Scenario No.2: it is also possible to sell the pound sterling today if the price takes a nosedive to 1.3082. At this moment the MACD indicator should be in the overbought area, which will limit the upward potential of the pair. It may also trigger a downward reversal. The price is expected to decrease to the opposite levels of 1.3054 and 1.3026.

Description of the chart:

What's on the chart:

The thin green line shows the entry point where you can buy a trading instrument.

The thick green line is the estimated price where you can place a Take profit order or lock in profit manually as the price is unlikely to rise above this level.

The thin red line is the entry point where you can sell the instrument.

The thick red line is the estimated price where you can place a Take profit order or lock in profit manually as the price is unlikely to decline below this level.

The MACD indicator. When entering the market, it is important to pay attention to overbought and oversold zones.

Important. Novice traders need to make very careful decisions when entering the market. It is best to stay out of the market before the release of important fundamental reports. It will help avoid losses due to sharp fluctuations in the exchange rate. If you decide to trade during the news release, always place stop orders to minimize losses. Without placing stop orders, you can lose the entire deposit very quickly, especially if you do not use money management, but trade in large volumes.

Remember that for successful trading it is necessary to have a clear trading plan like the one I presented above. Relying on spontaneous trading decisions based on the current market situation is a losing strategy of an intraday trader.