FX.co ★ Analysis and trading tips for GBP/USD on July 13

Analysis of transactions in the GBP / USD pair

GBP/USD tested 1.1836 on Tuesday. At that time, the MACD line was far from zero, so the downside potential was limited. Sometime later, the pair tested 1.1885, but it happened also when the MACD was far from zero. As a result, the upside potential was limited. The second test of 1.1885 led to losses as well. No other signal appeared for the rest of the day.

The speech of MPC member John Cunliffe did little to help pound. Likewise, the latest reports from the US only added pressure to GBP/USD.

The rise of the pair earlier was just a correction ahead of today's report on the US economy. Volatility may surge if industrial output, GDP and trade balance in the UK exceed expectations. However, by afternoon, the dollar will rise as US CPI is expected to jump to 9.0%. Core CPI will also increase, which could influence the Fed to implement more rate hikes in the future. The report on the US federal budget will be of little interest to the market.

For long positions:

Buy pound when the quote reaches 1.1940 (green line on the chart) and take profit at the price of 1.1994 (thicker green line on the chart). A rally will occur if GDP data in the UK exceeds expectations. However, 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 1.1891, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1940 and 1.1994.

For short positions:

Sell pound when the quote reaches 1.1891 (red line on the chart) and take profit at the price of 1.1818. Pressure will return if latest data indicate growing inflationary pressure in the US. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.1940, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1891 and 1.1818.

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 decision based on the current market situation is an inherently losing strategy for an intraday trader.