FX.co ★ Analysis and trading tips for GBP/USD on August 19

Analysis of transactions in the GBP / USD pair

The test of 1.2056 took place at a time when the MACD was far from zero, which limited the upside potential of the pair. Sometime later, another test happened, but this time the MACD line was in the overbought area. This was a good signal to sell, and prompted at least 50 pips of price decrease. The test of 1.2012 in the afternoon occurred when the MACD had already gone down quite a lot from zero, so short positions were no longer taken.

Given that there were no important statistics on the UK yesterday, bulls managed to seize the moment to push pound to new daily highs. However, the increase did not last long as the weekly data on jobless claims, Philadelphia Fed manufacturing index and existing home sales returned demand for dollar in the afternoon.

Ahead is the report on the volume of retail sales in the UK, which may put pressure on GBP provided that the figure fell short of forecasts. But during the US session, there are no statistics at all, so it is possible that after updating the weekly lows, traders will take profits, which may lead to an upward correction of the pair.

For long positions:

Buy pound when the quote reaches 1.1932 (green line on the chart) and take profit at the price of 1.1973 (thicker green line on the chart). However, there is little chance for a rally today as the market is rather bearish.

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 1.1879, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1932 and 1.1973.

For short positions:

Sell pound when the quote reaches 1.1879 (red line on the chart) and take profit at the price of 1.1848. Pressure could return at any moment, especially if UK retail sales fell short of forecasts.

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 1.1932, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1897 and 1.1848.

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.