Analysis of transactions in the GBP / USD pair
GBP / USD hit 1.3415 last Friday, however, the MACD line was far from zero so buying was very risky. Some time after, the indicator moved to the oversold area, so bears were able to take short positions, provoking a 25-pip drop in the pair. No other signal appeared for the rest of the day.
There is no UK data to be released today and many markets are closed after the celebration of Christmas. As such, volatility and activity of traders will be minimal, so the best solution is not to trade. But if you want to test the strength of the market, do it with a small volume as movements can be unpredictable.
For long positions:
Buy pound when the quote reaches 1.3415 (green line on the chart) and take profit at the price of 1.3448 (thicker green line on the chart). However, there is little chance for growth today because most traders will take profit before the New Year holidays.
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 1.3389, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3415 and 1.3448.
For short positions:
Sell pound when the quote reaches 1.3389 (red line on the chart) and take profit at the price of 1.3351. There is a huge chance for a decline today because trading volume is likely to be low.
Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.3415, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3389 and 1.3351.
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 material has been provided by InstaForex Company – www.instaforex.com