Analysis of transactions in the GBP / USD pair

A signal to buy emerged after GBP/USD hit 1.3605. However, there was no large increase even though the MACD line was starting to move above zero. After rising by 15 pips, pressure returned on the market, triggering another decline in the pair. A second attempt occurred by mid-day, but the MACD line was already far from zero, so the upside potential was limited. In the afternoon, the market signal shifted to sell, but there was no decrease as the MACD line was still far from zero.

The parliamentary hearing regarding the Bank of England monetary policy did not help pound rally yesterday even though Andrew Bailey spoke a lot about high inflation. This is because the tension in Ukraine escalated, resulting in a sharp decrease in risk appetite and increase in demand for dollar. Markets are obviously monitoring the actions of the White House and the sanctions that the Joe Biden administration may resort to in response to the issue in Ukraine

The UK will release its data on retail sales today, followed by a speech from Bank of England Governor Andrew Bailey. The statements may offset the losses seen in the morning, but there may be another decline in the afternoon amid strong GDP report and jobless claims data from the US. Speeches by FOMC members Raphael Bostic and Loretta Mester could also prompt an even greater surge in volatility, in favor of dollar.

For long positions:

Buy pound when the quote reaches 1.3525 (green line on the chart) and take profit at the price of 1.3559 (thicker green line on the chart). A rally will occur only if the upcoming speeches of Bank of England representatives show a hawkish stance on monetary policy.

But 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 1.3495, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.3525 and 1.3559.

For short positions:

Sell pound when the quote reaches 1.3495 (red line on the chart) and take profit at the price of 1.3463. Pressure will return if data from the UK turn out weaker than expected, and if the Bank of England does not say hawkish statements on monetary policy.

But 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 1.3525, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.3495 and 1.3463.

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.