Analysis and trading tips for GBP/USD on May 3
May 3, 2023 7:25 amVideo
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Analysis of transactions and tips for trading GBP/USD
Pound tested the level of 1.2489 when the MACD line had just started to move down from zero, which was a good signal to sell. This resulted in a price decrease of over 30 pips. However, the target level of 1.2450 was reached only when it was already mid-day.
Poor data on business activity in the UK manufacturing sector dragged pound down, but the situation stabilized in the afternoon. Since the economic calendar in the US is empty today, markets will focus more on the events during the US session.
The US is scheduled to release an employment report from ADP, as well as business activity data in the service sector from ISM. Growth in these indicators will not give the Fed a chance to consider a softer policy in the future. Therefore, rates are likely to continue increasing, which will be in favor of dollar. That will also lead to a collapse in pound.
For long positions:
Buy pound when the level of 1.2505 (green line on the chart) is reached and take profit at the price of 1.2549 (thicker green line on the chart). Growth could occur, but not in the morning. Also, 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 1.2480, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2505 and 1.2549.
For short positions:
Sell pound when the level of 1.2480 (red line on the chart) is reached and take profit at the price of 1.2437. Pressure will return if the Fed maintains an aggressive policy. 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 after two consecutive price tests of 1.2505, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2480 and 1.2437.
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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