FX.co ★ Analysis and trading tips for GBP/USD on July 20

Analysis of transactions in the GBP / USD pair

When GBP/USD tested 1.1993, the MACD line was far from zero, so the upside potential was limited. Meanwhile, before the test of 1.2045, there were 3-4 pips missing, so sell-offs did not occur. No other signals appeared for the rest of the day.

Although the change in jobless claims in the UK was better than expected and the unemployment rate fell, there was a problem in average wages because the rate at which it was growing slowed down, making inflation-adjusted household incomes become lower. If reports continue to indicate a further rise in inflation, the crisis in the cost of living will exacerbate and the Bank of England will be forced to ramp up interest rates, which will slow the pace of economic growth. It will also mean that the upward potential of the pound will be limited. In the US, reports over the housing market and mortgage loans will be coming, but they are of little interest, so volatility will be fairly subdued.

For long positions:

Buy pound when the quote reaches 1.2036 (green line on the chart) and take profit at the price of 1.2097 (thicker green line on the chart). There is a chance for a rally today, but only if reactions to the UK inflation data are positive, which is unlikely.

Take note that when buying, the MACD line should be above zero or is starting to rise from it. It is also possible to buy at 1.1972, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2036 and 1.2097.

For short positions:

Sell pound when the quote reaches 1.1972 (red line on the chart) and take profit at the price of 1.1927. Pressure will return if strong inflationary pressures destroy the UK economy.

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Pound can also be sold at 1.2036, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1972 and 1.1927.

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.