Analysis and trading tips for GBP/USD on May 12
May 12, 2023 8:23 amVideo
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Analysis of transactions and tips for trading GBP/USD
The test of 1.2595 coincided with the time that the MACD line had just started to move above zero, which was a good reason to buy. However, there was no price increase even after the Bank of England raised interest rates. Sometime later, there was another test, but it was at the level of 1.2566 and the MACD line had just started to move down from zero. This resulted in a decline of over 60 pips.
There was not much market reaction as the recent policy decision of the Bank of England was similar to what everyone expected. But today, the UK is releasing data on GDP, which could prompt a massive decline in pound, provided that the figure for the month of March disappoints. Reports on industrial production, manufacturing output and foreign trade balance will also be of great interest, as will the speech of Bank of England MPC member Huw Pill. Consumer sentiment data from the University of Michigan and inflation expectations in the US could help pound recover.
For long positions:
Buy pound when the level of 1.2527 (green line on the chart) is reached and take profit at the price of 1.2570 (thicker green line on the chart). Growth could occur and it could probably recover yesterday’s losses. However, before buying, make sure that the MACD line is above zero or is starting to rise from it. Pound can also be bought after two consecutive price tests of 1.2499, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2527 and 1.2571.
For short positions:
Sell pound when the level of 1.2499 (red line on the chart) is reached and take profit at the price of 1.2455. Pressure will return if there is very weak economic data from the UK. However, before selling, make sure that the MACD line is below zero or is starting to move down from it. Pound can also be sold after two consecutive price tests of 1.2527, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2499 and 1.2455.
What’s on the chart:
Thin green line – entry price at which you can buy GBP/USD
Thick green line – estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely.
Thin red line – entry price at which you can sell GBP/USD
Thick red line – estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely.
MACD line- it is important to be guided by overbought and oversold areas when entering the market
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 decision based on the current market situation is an inherently losing strategy for an intraday trader.
The material has been provided by InstaForex Company – www.instaforex.com
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