Analysis of trades and tips for trading the pound sterling
Friday was not the best day for trading the pound sterling due to many false signals. The pound sterling was trying to break through 1.3292 at a time when the MACD indicator had already declined significantly from the zero level. For this reason, many traders refrained from opening short positions on the pound sterling at that level. Then the price managed to rise higher and tested 1.3317. At that moment, the MACD indicator also moved up significantly from the zero level. Therefore, there was no signal to open long positions. The quotes undertook another attempt to test 1.3317 at 12.20. The MACD indicator was in the overbought area, indicating the completion of the pair's growth. It gave an excellent entry point to open short positions along with the trend. However, everything did not go according to the scenario. There was practically no downward movement and the pound sterling continued to grow, recouping losses.
Some analysts believe that the pound sterling made a small upward correction thanks to the speech of BoE member Hugh Pill. Following his speech, many traders closed their positions. Today, the economic calendar contains no important statistics. The UK will reveal its lending report. This data is unlikely to stir the market. Nevertheless, one should pay attention to UK mortgage approvals as well as met mortgage borrowing data. If the figures turn out to be positive, the pound sterling is likely to add gains. In the afternoon, market participants are anticipating the US pending home sales data and Jerome Powell's speech. Traders will look for hints of changes in the monetary policy already during the December meeting, which will take place quite soon. The regulator is expected to tighten monetary policy by speeding up bond purchases tapering. If so, the greenback will gain momentum.
Entry points to open long positions
Scenario №1: one may consider long positions today if the price reaches 1.3345 (green line on the chart) with the target level of 1.3386 (thicker green line on the chart). It is recommended to open long positions at 1.3386 and sell in the opposite direction (counting on a movement of 15-20 pips in the opposite direction from the level). The pound sterling may rise within an upward correction for the pair, which has been forming for quite a long time. Important! Before opening long positions, make sure that the MACD indicator is above the zero level and it has just begun to grow from it.
Scenario №2: it is also possible to open long positions on the pound sterling today if the price approaches 1.3325. At this moment the MACD indicator should be in the oversold area, which will limit the downward movement of the pair. So, it may trigger an upward reversal. The pair may climb to 1.3345 and 1.3386.
Entry points to open short positions
Scenario №1: it is recommended to sell the pound sterling today only after it reaches 1.3325 (the red line on the chart), which will lead to a rapid decline of the pair. The key target level is located at the 1.3288 level. After the price hits this level, it is better to lock in profits and immediately open long trades in the opposite direction (counting on a movement of 15-20 pips in the opposite direction from the level). It is best to sell the pair when it is rising as the downward trend is prevailing. Important! Before opening short positions, make sure that the MACD indicator is below the zero mark and it has just begun to decline from it.
Scenario №2: traders may also consider short positions on the pound sterling today if the price reaches 1.3345. At this moment, the MACD indicator should be in the overbought area, which will limit the upward movement of the pair. It may also lead to a downward reversal. The price is expected to decline to the levels of 1.3325 and 1.3288.
Description of the chart:
The thin green line indicates the entry points to open long positions.
The thick green line is the estimated price where you can place a Take Profit order or close a position by yourself as the price is unlikely to rise above this level.
The thin red line indicates the entry points to open short positions.
The thick red line is the estimated price where you can place a Take Profit order or close a position by yourself as the price is unlikely to decline below this level.
The MACD indicator. When entering the market, it is important to pay attention to overbought and oversold zones.
Important. Novice traders need to make decisions very carefully before entering the market. Before the release of important fundamental reports, it is best to stay away from the market to avoid losses due to sharp fluctuations in the exchange rate. If you decide to trade during the news release, then always place Stop Orders to minimize losses. Without placing Stop Orders, you may lose the entire deposit very quickly, especially if you do not use money management, but trade in large volumes.
Bear in mind that for successful trading it is necessary to have a trading plan, following the example of the one presented above. Relying on spontaneous trading decisions based on the current market situation is a losing strategy of an intraday trader.
