FX.co ★ Analysis and trading tips for GBP/USD on December 22

Analysis of transactions in the GBP / USD pair

Pound rose by 35 pips on Tuesday morning, thanks to the buy signal that appeared when the MACD line was moving above zero. It allowed traders to safely take long positions, provoking an increase in the pair. Those who showed restraint, waiting for the move towards 1.3269, got 45 pips of profit.

Retail sales in the UK disappointed traders, so GBP / USD could not climb up yesterday. The data said sales grew at a slower pace this December, rising by only 8 points compared to the 39 points in November. Usually, sales skyrocket by as much as 15% during this month, so seeing the current figure is a cause for concern, as it could lead to a slowdown in GDP growth in the 4th quarter. Balance of payments in the US also slowed the rally of pound even though it did not support dollar.

GBP could rally today, but only if reports on UK GDP and balance of payments exceed expectations. In the afternoon, US will release reports on Q3 GDP, home sales and consumer confidence, which, if showed better-than-expected figures, will further strengthen the position of dollar against pound.

For long positions:

Buy pound when the quote reaches 1.3264 (green line on the chart) and take profit at the price of 1.3302 (thicker green line on the chart). Growth will be observed if data in the UK exceed expectations and if the situation with coronavirus improves.

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 1.3236, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3264 and 1.3302.

For short positions:

Sell pound when the quote reaches 1.3236 (red line on the chart) and take profit at the price of 1.3197. Bad data on UK GDP and good statistics on the US will interrupt the pair's growth in the afternoon.

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 1.3264, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3236 and 1.3197.

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.