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19.10.2021 09:26 AM
Analysis and trading recommendations for GBP/USD on October 19

Analysis of transactions in the GBP / USD pair

There was a signal to buy in GBP / USD on Monday morning, but it did not lead to a huge increase despite the MACD line moving up from zero. Then, after that, another buy signal appeared, but it had to be ignored because the MACD line was far away from zero. Fortunately, in the afternoon, the MACD line went to the oversold area, so traders were able to take long positions, pushing GBP / USD up by 30 pips.

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Pound continued to rally, thanks to the statements of Bank of England Deputy Governor John Cunliffe. At the same time, weak data on US output decreased demand for dollar, which accordingly led to a further rise in GBP / USD.

Rally may continue today if BoE Governor Andrew Bailey addresses inflation and monetary policy. But in the afternoon the situation may change amid good data on US building permits and housing construction. Speeches from Fed members Mary Daly and Michelle Bowman will also attract investor interest.

For long positions:

Open a long position when pound reaches 1.3781 (green line on the chart) and take profit at 1.3830 (thicker green line on the chart). Price will jump only if there is a successful breakout above 1.3781. Statements from Bank of England Governor Andrew Bailey may also provoke a rise in GBP / USD

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 1.3753, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3781 and 1.3830.

For short positions:

Open a short position when pound reaches 1.3753 (red line on the chart) and take profit at 1.3712. Pressure may return if the attempt to break above the weekly high is unsuccessful.

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 1.3781, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3753 and 1.3712.

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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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