Analysis of transactions and tips for trading the British pound
The first test of the 1.3004 price occurred at a time when the MACD indicator went down far enough from the zero mark, which in my opinion limited the pair's downward potential. For this reason, I did not sell the pound and waited for the implementation of the second scenario to buy. I didn't have to wait long: half an hour later I saw another test of 1.3004 and at that moment the MACD was already in the oversold area. The decision was made to buy the pound. A little later, there was another test at 1.3004, where the MACD had already begun to recover from the bottom up to the zero border, confirming the correct entry into the market to buy. As a result, the growth amounted to more than 50 points.
Mixed data on the number of applications for unemployment benefits, the unemployment rate and changes in the level of average earnings of the population caused the pound to fall in the first half of the day as they signaled a deterioration in the welfare of British households. Then the focus shifted to the afternoon and to data on the consumer price index in the United States. According to a report by the US Department of Labor, the consumer price index rose to 8.5% compared to last year in March, after jumping to 7.9% in February. Monthly inflation jumped by 1.2%. Economists had forecast CPI growth to 8.4% per annum and 1.2% compared to February. Statements by FOMC member Lael Brainard pushed the US dollar to strengthen in the afternoon and the trading instrument returned to the month's lows. In today's European session, you need to get acquainted with the data on the consumer price index in the UK and the retail price index. But even strong reports will not lead to a rise in the pound, as high inflation will only worsen the situation for the UK Treasury. The next data on inflation in the United States will be released in the afternoon. Reports on the producer price index and producer price index excluding food and energy prices are expected. Strong indicators will strengthen the dollar's position and hopes for a more active rate hike in the United States.
For long positions:
You can buy the pound today when you reach the entry point around 1.3022 (green line on the chart) with the goal of rising to the level of 1.3071 (thicker green line on the chart). In the area of 1.3071, I recommend leaving long positions and opening short positions in the opposite direction (counting on a movement of 20-25 points in the opposite direction from the level). You shouldn't count on the pound's growth in the first half of the day, especially in case we receive weak data on the economy and inflation. Before buying, make sure that the MACD indicator is above the zero mark and is just beginning to rise from it.
You can also buy the pound today if the price reaches 1.2989, but at this moment the MACD indicator should be in the oversold area, which will limit the pair's downward potential and lead to an upward reversal of the market. We can expect growth to the opposite levels of 1.3022 and 1.3071.
For short positions:
You can sell the pound today after updating the level of 1.2989 (the red line on the chart), which will lead to a rapid decline of the pair. The bears' main goal is the 1.2950 level, where I recommend leaving short positions, as well as immediately opening long positions in the opposite direction (counting on a movement of 20-25 points in the opposite direction from the level). A return to weekly lows and their breakdown may strengthen the bear market, which will lead to a new fall for the pair, and weak inflation data will only increase investors' pessimism. Before selling, make sure that the MACD indicator is below the zero mark and is just beginning its decline from it.
You can also sell the pound today if the price reaches 1.3032, but at this moment the MACD indicator should be in the overbought area, which will limit the pair's upward potential and lead to a reverse reversal of the market to the downside. We can expect a decline to the opposite levels of 1.3004 and 1.2960.
What's on the chart:
The thin green line is the key level at which you can place long positions in the EUR/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 EUR/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.