Analysis of transactions in the GBP / USD pair
A profitable but rather ambiguous signal emerged in the GBP / USD pair yesterday. In particular, it was to sell the pound from 1.3536, which led to a price drop of more than 50 pips. However, the MACD line was at a very low level, which means that GBP / USD is oversold. Other than that, there were no other signals to enter the market.
Trading recommendations for December 29
Demand for the pound decreased, especially since a Brexit trade deal has been concluded. In addition, many already expect that the EU parliament would approve the deal, therefore, its announcement did not lead to a very strong rise in GBP / USD. Now, all that is left is the ratification of the UK parliament.
In another note, the current epidemiological situation in the UK is escalating, so traders are having increased fears over what will happen next year, especially with the recently-imposed tough restrictions in the country. There is a high chance that the pair will continue its downward correction in the market because of this
For long positions:
Buy the pound when the quote reaches 1.3499 (green line on the chart), and then take profit at the level of 1.3569 (thicker green line on the chart). Demand for the currency will increase even further if the UK and EU parliaments finally ratifies the Brexit trade deal.
But keep in mind that before buying, make sure that the MACD line is above zero and is starting to rise from it.
For short positions:
Sell the pound after the quote reaches 1.3470 (red line on the chart), and then take profit at the level of 1.3405. Demand for the currency is expected to decline due to lack of positive news and uncertainty among traders.
Also, keep in mind that before selling, make sure that the MACD line is below zero and is starting to move down from it.
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.
The material has been provided by InstaForex Company - www.instaforex.com