Analysis of trades and tips for trading GBP
Yesterday, there was only one signal for the pound sterling to enter the market. It turned out to be unprofitable despite the fact that the price was trying to break through 1.3511 at a time when the MACD indicator had just started its downward movement from the zero level. It was a confirmation of the correct entry point into short positions. However, the pound sterling was unable to drop amid market uncertainty and the lack of fundamental news. There were no other entry points yesterday.
The economic calendar remains empty. It is likely to help bulls to maintain an upward correction in the morning. During the European session, traders will focus their attention on the speech of the Bank of England chief economic, Hugh Peel. Investors believe that he may provide additional comments on monetary policy tightening aimed at combating rising inflation. usually, the pound sterling appreciates amid hawkish statements. In this case, I recommend applying scenario No. 1. In the afternoon, the US will unveil its wholesale inventories data. Apart from that, investors are anticipating the speeches of Fed policymakers Michelle Bowman and Loretta Mester. If they express concerns about inflationary pressure in the US, the US dollar may win luster with traders, especially ahead of tomorrow's US inflation data for January this year. If they avoid these topics, it would be wise to stick to the sideways trading strategy according to scenario No. 2 for buying and selling.
Entry points to open long positions
Scenario N1: it is recommended to open long positions today if the price approaches the entry point near the level of 1.3562 (green line on the chart). If so, it may also rise to the level of 1.3593 (thicker green line on the chart). I recommend closing long positions at this level and opening short ones, bearing in mind a 15-20 pip downward correction. The pound sterling may also turn higher in the first half of the day if it breaks through the resistance level of 1.3560. If this attempt is successful, the trading sentiment will be bullish. Important! Before opening long positions, make sure that the MACD indicator is above the zero mark and it has just started to rise from it.
Scenario No.2: it is also possible to buy the pound sterling today if the price touches 1.3540. At this moment, the MACD indicator should be in the oversold area, which will limit the downward potential of the pair. It may also lead to an upward reversal. The pair is expected to jump to the opposite levels of 1.3562 and 1.3593.
Entry points to open short positions
Scenario No.1: it is recommended to open short positions on the pound sterling today only if the price declines to the level of 1.3540 (the red line on the chart). It will trigger a rapid drop of the pair. The important target level is 1.3496. I would advise you to close short positions at this level and open long ones, allowing a 15-20 pip intraday correction. The pressure on the pound sterling will return only in the case of strong US macro statistics and hawkish statements of Fed members. Important! Before opening short positions, make sure that the MACD indicator is below the zero mark and it has just started to decline from it.
Scenario No.2: it is also possible to sell the pound sterling today if the price hits 1.3562. At this moment, the MACD indicator should be in the overbought area, which will limit the upward potential of the pair. It may also lead to a downward reversal. The pair is expected to decline to the opposite levels of 1.3540 and 1.3496.
Description of the chart:
The thin green line shows the entry point to open long positions on a trading instrument.
The thick green line is the estimated price where you can place a take-profit order or lock in profits by yourself as the price is unlikely to rise above this level.
The thin red line shows the entry point to open short positions on a trading instrument.
The thick red line is the estimated price where you can place a take-profit order or lock in profits 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 the overbought and oversold zones.
Important. Novice traders need to make very careful decisions on entering the market. Before the release of important fundamental reports, it is better to stay out of the market to avoid losses due to sharp fluctuations. If you decide to trade during the news release, then always place stop orders to minimize losses. Without placing stop orders, you can lose the entire deposit very quickly, especially if you do not use money management, but trade in large volumes.
Remember that for successful trading it is necessary to have a clear trading plan, following the example of the one I presented above. Relying on spontaneous decision-making based on the current market situation is initially a losing strategy of an intraday trader.
