Analysis of transactions in the GBP/USD pair:
The pound tested the level of 1.3849 quite a lot yesterday, but it was not possible to wait for a normal sell signal from this level due to the presence of the MACD indicator in the oversold area. However, for the same reason, a signal was formed to buy the pound. The scenario for opening long positions from the level of 1.3849 worked out when the MACD indicator was in the oversold area. In the afternoon, there was a buy signal for the pound at the level of 1.3895, but it should have been ignored since the indicator was in the oversold area at the time of the test. This scenario formed a sell signal for the pound, but no strong downward movement was recorded.
Trading recommendations for July 13
Today, the Bank of England will publish a report, which may strengthen the pound’s position. However, the whole focus will be on the US inflation data, which will be released in the afternoon. Most likely, the direction of the pound in the next few days will depend on this indicator, until the retail sales report is released on Thursday. It is best to trade on further strengthening of the pound against the dollar.
For long positions:
It is possible to buy the pound when it reaches the entry point around the level of 1.3906 (green line on the chart) with an upward target of 1.3965 (thicker green line on the chart). In this area, it is suggested to leave purchases and open sell positions in the opposite direction (counting on a movement of 15-20 points in the opposite direction from the level). It is possible to expect further growth of the pound according to the newly formed upward trend last Friday. Before buying, make sure that the MACD indicator is above zero and just starting to rise from it. It is also possible to buy the pound if the price reaches the level of 1.3869, but at this time, the MACD indicator should be in the oversold area, which will limit the potential to decline of the pair and lead to an upward reversal in the market. We can expect growth to the opposite level of 1.3909.
For short positions:
It is possible to sell the pound only after updating the level of 1.3869 (red line on the chart), which will lead to a sharp decline of the pair. The key downward target will be the level of 1.3816, where it is suggested to leave sales and immediately open buy positions in the opposite direction (counting on a movement of 15-20 points in the opposite direction from the level). The pound will only be under pressure again in the morning after a negative reaction to the Bank of England’s financial stability report. Before selling, make sure that the MACD indicator is below zero and just beginning to decline from it. One can also sell the pound if the price reaches the level of 1.3909, but at this time, the MACD indicator should be in the overbought area, which will limit the potential to rise of the pair and lead to a downward reversal. A decline to the opposite level of 1.3869 can be expected.
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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