Relevance up to 03:00 2022-07-12 UTC–4
Analysis of transactions in the GBP / USD pair
GBP/USD tested 1.1992 last Friday. At that time, the MACD line was quite far from zero, so the downside potential was limited. Some time later, the pair fell to 1.1952, but there was no rebound. It was only after another 30-pip drop that pound turned and started moving up again. No other signal appeared for the rest of the day.
Friday’s speech by Bank of England Deputy Governor Sam Woods went unnoticed by investors, so GBP/USD did not rally. At the same time, latest US data raised demand for dollar a bit, but, by analogy with the movement in the morning, the pair’s decline was quickly offset.
Bank of England Governor Andrew Bailey is expected to speak today, but it is unlikely to mention anything new, so pressure on the pound will continue despite all the attempts of buyers to continue the upward correction. Meanwhile, in the afternoon, the US will publish the index of trends in the labor market, which is not of great interest. The speech of FOMC member John Williams is also unlikely to affect the market, so pound sellers have every chance of resuming the downward trend.
For long positions:
Buy pound when the quote reaches 1.1993 (green line on the chart) and take profit at the price of 1.2040 (thicker green line on the chart). Although there is little chance for a rally today, buyers can still do so especially when the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1956, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1993 and 1.2040.
For short positions:
Sell pound when the quote reaches 1.1956 (red line on the chart) and take profit at the price of 1.1911. Pressure will return, especially after strong US statistics. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.1993, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1956 and 1.1911.
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 decision based on the current market situation is an inherently losing strategy for an intraday trader.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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