FX.co ★ Analysis and trading recommendations for GBP/USD on October 12

Analysis of transactions in the GBP / USD pair

There was a signal to sell in GBP / USD on Monday that coincided with the MACD line being at the overbought area. This allowed bearish traders to take short positions, which provoked a 40-pip drop in the pair. Sadly, the price did not reach 1.3607. No other signals appeared for the rest of the day.

Although the data on UK GDP was ignored by the market, pound remained in demand all Monday morning. But by afternoon, pressure returned on the currency amid disappointing UK unemployment rate

GBP / USD may continue trading downwards if reports on UK jobless claims and unemployment rate disappoint traders. Also, in the afternoon, there will be data from the NFIB, followed by speeches from FOMC members Richard Clarida and Raphael Bostic. If they address inflation and potential bond tapering, demand for dollar will rise, which will accordingly lead to a further drop in the pair.

For long positions:

Open a long position when pound reaches 1.3620 (green line on the chart) and take profit at 1.3685 (thicker green line on the chart). But there is little chance that the price will increase today, especially if UK employment data disappoints traders.

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 1.3590, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3620 and 1.3685.

For short positions:

Open a short position when pound reaches 1.3590 (red line on the chart) and take profit at 1.3535. Price may decline today, given that bullish traders failed to hit weekly highs yesterday. Much will also depend on the upcoming statements from Fed representatives.

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 1.3620, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3590 and 1.3535.

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.