29.10.202109:32 Forex Analysis & Reviews: Analysis and trading recommendations for GBP/USD on October 29

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Analysis of transactions in the GBP / USD pair

Pound rose by 20 pips on Thursday because traders took long positions amid a signal to buy that coincided with the MACD line moving above zero. Then, after that, another buy signal appeared, and this time it provoked a huge 50-pip increase. Obviously, the statements of ECB chief Christine Lagarde fueled demand for risky assets, including pound.

Pound grew further in the afternoon because demand for dollar decreased amid weak US Q3 GDP. Most likely, this bullish momentum will continue because UK lending data and mortgage applications, which are due out today, are unlikely to have significant impact on the market. At the same time, in the afternoon, reports on US income and expenditures will be published, followed by data on consumer sentiment. Weak figures will put even more pressure on dollar, which will accordingly lead to further increase in GBP/USD.

For long positions:

Open a long position when pound reaches 1.3803 (green line on the chart) and take profit at 1.3855 (thicker green line on the chart). The pair may hit record prices if the US releases weak macroeconomic statistics.

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 1.3777, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3803 and 1.3855.

For short positions:

Open a short position when pound reaches 1.3777 (red line on the chart) and take profit at 1.3734. Weak UK data and lack of bullish activity around 1.3734 will put pressure on the pair.

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 1.3803, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3777 and 1.3734.

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.

Jakub Novak
Analytical expert of InstaForex
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