FX.co ★ Analysis and trading tips for GBP/USD on January 12

Analysis of transactions in the GBP / USD pair

GBP / USD reached 1.3584 at a time when the MACD line was moving below zero. That seemed to be a good signal to sell, but it led to losses. Some time after, the pair hit 1.3610. This time, the indicator was going up, which led to a signal to buy. That prompted traders to take long positions, resulting in a 15-pip increase. The quote went back to 1.3584 in the afternoon, but since the MACD line was far from zero, the downside potential was limited. A similar scenario occurred during the US session, but with a buy signal around 1.3601.

GBP / USD rallied yesterday because Fed Chairman Jerome Powell hinted that he would not rush to raise interest rates. That lowered demand for dollar, which accordingly led to the increase of the pair. And most likely, this bullish move will continue as there is no UK data to be released today. The statements of Bank of England Deputy Governor John Cunliffe could also add support to pound in the short term. But in the afternoon, the pair may decrease as US CPI could force the Fed to act more aggressively in terms of monetary policy. If that happens, demand for dollar will return. The upcoming Fed Beige Book can be ignored as it has no importance to the forex market.

For long positions:

Buy pound when the quote reaches 1.3656 (green line on the chart) and take profit at the price of 1.3691 (thicker green line on the chart). But before doing so, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3584, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.3601 and 1.3631.

For short positions:

Sell pound when the quote reaches 1.3625 (red line on the chart) and take profit at the price of 1.3586. Pressure will return if US inflation exceeds expectations.

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 1.3656, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3625 and 1.3586.

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.