Analysis of transactions and tips for trading GBP/USD
Pound tested 1.2407 when the MACD line was far from zero, limiting the upside potential of the pair. Meanwhile, selling on the rebound after updating 1.2442 brought about a 25-pip movement.
Pound rose on Tuesday due to the surprising growth in UK average wages. The increase will inevitably affect inflation in the future, which will be discussed this morning.
Ahead are key inflation reports, namely the UK consumer price index and the core price index. These will be crucial to the further direction of GBP/USD, in which growth will lead to purchases, as this will put more pressure on the Bank of England to continue raising rates. The upcoming speech of MPC member Catherine Mann may also affect pound because she will likely take a hawkish stance on monetary policy. In the afternoon, the Fed Beige Book is due to be released, but it is unlikely to have serious effects on the market.
For long positions:
Buy pound when the level of 1.2444 (green line on the chart) is reached and take profit at the price of 1.2505 (thicker green line on the chart). Growth will be seen if there is strong inflation data from the UK. However, before buying, make sure that the MACD line is above zero or is starting to rise from it. Pound can also be bought at 1.2404, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2444 and 1.2505.
For short positions:
Sell pound when the level of 1.2404 (red line on the chart) is reached and take profit at the price of 1.2345. Pressure will increase if there is a decline in UK inflation. However, make sure that before selling, the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.2444, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2404 and 1.2345.
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
Analysis of transactions and tips for trading GBP/USD
Pound tested 1.2407 when the MACD line was far from zero, limiting the upside potential of the pair. Meanwhile, selling on the rebound after updating 1.2442 brought about a 25-pip movement.
Pound rose on Tuesday due to the surprising growth in UK average wages. The increase will inevitably affect inflation in the future, which will be discussed this morning.
Ahead are key inflation reports, namely the UK consumer price index and the core price index. These will be crucial to the further direction of GBP/USD, in which growth will lead to purchases, as this will put more pressure on the Bank of England to continue raising rates. The upcoming speech of MPC member Catherine Mann may also affect pound because she will likely take a hawkish stance on monetary policy. In the afternoon, the Fed Beige Book is due to be released, but it is unlikely to have serious effects on the market.
For long positions:
Buy pound when the level of 1.2444 (green line on the chart) is reached and take profit at the price of 1.2505 (thicker green line on the chart). Growth will be seen if there is strong inflation data from the UK. However, before buying, make sure that the MACD line is above zero or is starting to rise from it. Pound can also be bought at 1.2404, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2444 and 1.2505.
For short positions:
Sell pound when the level of 1.2404 (red line on the chart) is reached and take profit at the price of 1.2345. Pressure will increase if there is a decline in UK inflation. However, make sure that before selling, the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.2444, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2404 and 1.2345.
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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