Relevance up to 01:00 2021-10-28 UTC–4
Analysis of transactions in the GBP / USD pair
There was a signal to buy in GBP / USD on Tuesday, but the increase was limited because the MACD line was in the wrong area. First it was at the overbought area, and then it moved far away from zero. Then, after that, a sell signal appeared, but this time it coincided with the MACD being at the overbought area. This allowed traders to take short positions, provoking a 30 and 60-pip decline in the pair.
Pound fell yesterday amid increased demand for dollar brought by the strong reports on US consumer confidence and primary home sales. And most likely, this decline will continue as there are no UK statistics scheduled to be published today. Moreover, in the afternoon, US will publish data on orders for durable goods, which may bring demand back to dollar if the figures exceed expectations. There will also be reports on the foreign trade balance and inventories in wholesale warehouses.
For long positions:
Open a long position when pound reaches 1.3780 (green line on the chart) and take profit at 1.3820 (thicker green line on the chart). Only strong UK data could push the pair up. Otherwise, GBP / USD will remain in a flat market, but with advantage on the side of sellers.
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 1.3757, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3780 and 1.3820.
For short positions:
Open a short position when pound reaches 1.3757 (red line on the chart) and take profit at 1.3716. Strong US data will put pressure on the pair.
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 1.3780, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3757 and 1.3716.
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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