FX.co ★ Analysis and trading tips for GBP/USD on June 14

Analysis of transactions in the GBP / USD pair

GBP/USD reaching 1.2242 led to a sell signal in the market, however, having the MACD line far from zero limited the downside potential of the pair. Some time later, the pair tested the level again, but this time the signal that emerged was to buy. That, however, also led to losses as the pair continued to move down. Purchases at 1.2185 also did not bring the expected result.

GBP/USD declined on Monday because of very weak data on industrial production and trade balance. According to official reports, UK GDP fell 0.3% in April, while output fell 0.1%. The Office for National Statistics noted that without taking into account this indicator, the economy grew by only 0.1%.

Important labor market reports are coming out this morning, with the change in jobless claims and average wages in the UK being the key figures. Weak readings will restore pressure on the pair and limit its corrective potential. In the afternoon, the US will publish a report on producer prices, which is likely to surpass economists' forecasts and show another monthly and yearly growth. That will remind traders and the Fed of the need for further tight monetary policy.

For long positions:

Buy pound when the quote reaches 1.2208 (green line on the chart) and take profit at the price of 1.2266 (thicker green line on the chart). However, there is little chance for a rally today, even with good data on the labor market. Nevertheless, note that 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 1.2157, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2208 and 1.2266.

For short positions:

Sell pound when the quote reaches 1.2157 (red line on the chart) and take profit at the price of 1.2095. Pressure will return at any moment, especially in case of weak UK reports. However, make sure that when selling, the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.220, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2157 and 1.2095.

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.