Relevance up to 02:00 2022-06-18 UTC–4
Analysis of transactions in the GBP / USD pair
GBP/USD reaching 1.2102 led to a sell signal in the market, however, having the MACD line far from zero limited the downside potential of the pair. Sometime later, the pair tested 1.2164 and formed a buy signal, but since the MACD line was still far from zero, the upside potential was limited. Fortunately, the second test was more successful as by that time the MACD line was climbing above zero, prompting a more than 65-pip increase in the pair. The quote hit 1.2229, but selling at the level led to losses.
The Bank of England carried out its fifth increase in interest rates, counting on another attempt to contain growing inflation. The committee voted 6-3 in favor of raising the rate by 25 basis points to 1.25%, while three voted for a 50 bp hike to 1.5%. The bank said it is ready to act more aggressively if the situation requires it.
The Bank of England also revised the forecast for inflation at the end of the year. The CPI is now expected to rise by 11.0% instead of the 10.0% previously announced. All this speaks of a possible growth in pound, which has been fairly oversold lately.
Today, there are no important statistics scheduled to be released in the UK, and only the speech of Bank of England representative Silvana Tenreyro is expected. His statements will have little effect on the market. In the afternoon, Fed Chairman Jerome Powell will deliver his speech, which will certainly talk about the need for a tough policy. This may provide some support to the dollar, however, a decrease in US industrial production will offset it.
For long positions:
Buy pound when the quote reaches 1.2316 (green line on the chart) and take profit at the price of 1.2383 (thicker green line on the chart). There is a chance for a rally today, but only in the morning. Nevertheless, remember that when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.2278, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2316 and 1.2383.
For short positions:
Sell pound when the quote reaches 1.2278 (red line on the chart) and take profit at the price of 1.2219. Pressure will return if there are no active purchases below 1.2270. 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 1.2316, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2278 and 1.2219.
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 are 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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