FX.co ★ Analysis and trading tips for GBP/USD on April 21

Analysis of transactions in the GBP / USD pair

A signal to sell emerged after GBP/USD hit 1.3013. However, there was no sharp decrease because the MACD line being far from zero limited the downside potential of the pair. It only fell by 20 pips before turning up again. In the afternoon, a test of 1.3036 took place, but the same scenario occurred, albeit with a buy signal, as the MACD line was still far from zero. The pair was 5 pips short of 1.3069, where traders could set up short positions and provoke a rebound.

Pound's growth on Wednesday morning did not surprise anyone because such a trend has been observed since the beginning of this week. However, the upside potential was limited because the latest reports on the US economy kept the pair in a side channel during the US session. Statements by FOMC members Mary Daly and Charles Evans were also of little interest as markets shifted their focus to today, where more important events are scheduled.

There is no UK data yet again today, so buyers can take advantage of this moment to break through to new weekly highs ahead of the speech of Bank of England Governor Andrew Bailey. Most likely, the speech will contain hints of a more aggressive monetary policy, although it is not entirely clear how this will affect the pound in an economy heading into recession.

Fed Chairman Jerome Powell is also scheduled to speak in the afternoon, where he could announce a 75-basis point rate hike. If that happens, demand for dollar will increase, which would prompt a sell off and decline in GBP/USD. Reports on US jobless claims, manufacturing index of the Philadelphia Fed and the index of leading indicators will also be released today.

For long positions:

Buy pound when the quote reaches 1.3071 (green line on the chart) and take profit at the price of 1.3114 (thicker green line on the chart). There is a chance for a rally today, but it will only be after the release of the Bank of England's further actions on growing inflation. Nevertheless, when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3041, but the MACD line should be in the oversold area as only by that will the market reverse to 1.3071 and 1.3114.

For short positions:

Sell pound when the quote reaches 1.3041 (red line on the chart) and take profit at the price of 1.3000. Pressure is likely to return on the market, especially if the Fed takes a more aggressive approach on its monetary policy. However, 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 1.3036, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3013 and 1.2982.

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.