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Analysis of transactions in the GBP / USD pair
News that Kwasi Kwarteng, the new Chancellor of the Exchequer in the UK, has decided to cut taxes and bail out households at a time of record inflation has sparked fears that Bank of England policies will not deliver the desired result in the fight against rising prices . If that really happens, the central bank will be forced to act more aggressively than before, which will cause even more damage to the economy.
Pound fell because of the news, and there is a huge chance that it will remain bearish as there are no statistics scheduled to be released in the UK today. A further decline is also likely to occur in the afternoon, when the US releases data on durable goods orders, consumer confidence and home sales in the primary market. Good numbers in these indicators will certainly strengthen the dollar because despite the Fed's aggressiveness, it will allow the economy to survive more steadfastly. Aggressive tones of Fed Chairman Jerome Powell and FOMC member Charles Evans will also prompt a fall in pound and a rise in dollar.
For long positions:
Buy pound when the quote reaches 1.0828 (green line on the chart) and take profit at the price of 1.0936 (thicker green line on the chart). Although growth is unlikely, traders could still buy as long as the MACD line is above zero or is starting to rise from it.
Pound can also be bought at 1.0764, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0828 and 1.0936.
For short positions:
Sell pound when the quote reaches 1.0764 (red line on the chart) and take profit at the price of 1.0653. Pressure could return at any moment, but take note that when selling, the MACD line should be below zero or is starting to move down from it.
Pound can also be sold at 1.0828, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0764 and 1.0653.
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 decision based on the current market situation is an inherently losing strategy for an intraday trader.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
