Analysis of transactions in the GBP / USD pair
Pound was stuck in a horizontal channel yesterday and showed absolutely no dynamics before the policy decision of the Federal Reserve. It was only in the afternoon that the market showed a trading signal – to sell – but it had to be ignored because the MACD line was quite far from zero. Long positions had to be ruled out as well because the indicator was not yet in the oversold area. There were no other signals for the rest of the day.
Trading recommendations for July 29
Pound rose on the news that the Federal Reserve will continue a 0-0.25% base interest rate. However, the central bank revised the bond purchase program, explaining that the economy has made progress towards their goals. Today, price movement will depend on the lending reports from UK. If the figures exceed expectations, demand for pound will increase even more. If not, there will be a decline in GBP / USD. Upcoming data on US GDP will also affect the market.
For long positions:
Open a long position when pound reaches 1.3936 (green line on the chart), and then take profit at the level of 1.3987 (thicker green line on the chart). GBP / USD will climb up if UK publishes good data on lending. But 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 1.3897 and 1.3846, but the MACD line should be in the oversold area in order to set off a market reversal to 1.3936.
For short positions:
Open a short position when pound reaches 1.3897 (red line on the chart), and then take profit at the level of 1.3846. A decline will occur if bullish traders close their positions this weekend. But before selling, make sure that the MACD line is below zero, or is starting to move down from it. It is also possible to sell at 1.3936 and 1.3987, but the MACD line should be in the overbought area in order to trigger a market reversal to 1.3897.
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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