Relevance up to 02:00 2021-10-22 UTC–4
Analysis of transactions in the GBP / USD pair
There was a signal to sell in GBP / USD on Wednesday, but the decrease was limited because the MACD line was far away from zero. Then, after that, a buy signal appeared, and this time it provoked a 30-pip increase because traders were able to safely take long positions, thanks to the MACD line being at the oversold area.
Pound declined yesterday because the latest UK CPI report came out worse than anticipated. But bullish traders took advantage of this situation (lower prices) to build up long positions again.
Today, there will be a report on UK industrial orders, but there is little chance that it would affect the market. As such, it is best to concentrate on the data scheduled for the afternoon, which are: US manufacturing activity, leading indicators and jobless claims. There will also be a speech from FOMC member Christopher Waller, although it may not provoke much investor interest.
For long positions:
Open a long position when pound reaches 1.3826 (green line on the chart) and take profit at 1.3859 (thicker green line on the chart). Price will jump if UK releases strong macro statistics.
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 1.3802, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3826 and 1.3859.
For short positions:
Open a short position when pound reaches 1.3802 (red line on the chart) and take profit at 1.3767. Pressure may return if there is no bullish activity around 1.3802. Weak UK statistics 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 1.3826, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3802 and 1.3767.
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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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