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Analysis of transactions in the GBP / USD pair
Several market signals appeared on Tuesday, but most of them were false because they came when the MACD line was not in a good area. The buy signals appeared when the indicator was at the overbought area, while the sell signals came when the MACD line was at the oversold area. But in the afternoon, one sell signal coincided with the time that the MACD line was at zero, so GBP / USD was able to drop by around 60 pips. Accordingly, the pair reached the target level, which is 1.3791.
Trading recommendations for July 7
Pound continued to slip on Tuesday despite the strong PMI data that was released in UK. And most likely, this downward move will continue if the upcoming report on house prices turns out weaker than expected. Upcoming minutes from the June Fed meeting may also add pressure to GBP / USD, as hints for a policy change will increase demand for dollar.
For long positions:
Open a long position when pound reaches 1.3822 (green line on the chart), and then take profit at the level of 1.3895 (thicker green line on the chart). It is quite difficult to expect an increase in GBP/USD given the massive drop yesterday. But before buying, make sure that the MACD line is above zero, or is starting to rise from it.
For short positions:
Open a short position when pound reaches 1.3783 (red line on the chart), and then take profit at the level of 1.3715. GBP / USD will come under pressure if the Federal Reserve hints at a future policy change, as such will increase demand for dollar. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.
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.
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