FX.co ★ Analysis and trading tips for GBP/USD on August 31

Analysis of transactions in the GBP / USD pair

Pound tested 1.1727 when the MACD was far from zero, so the upside potential was limited. Sometime later, there was a test of 1.1698, but this time the MACD was just starting to move below zero, which was a good signal to sell. Considering that the US released stronger-than-expected statistics, it was no surprise that the quote fell by more than 40 pips. Long positions around 1.1659 did not bring much result.

Pound continues to update yearly lows, so there are not many people who want to buy it. Strong data on the US consumer confidence indicator also led to a consolidation below the 17th figure yesterday.

There are no reports scheduled to be released in the UK today, so buyers could take the chance to change the price movement, albeit a little. In the afternoon, the US will publish data on employment in the non-farm sector, followed by the index of business activity in Chicago. Good numbers will lead to a rise in dollar and subsequent dharp downward movement in GBP/USD. The speech by FOMC member Loretta Mester is unlikely to affect the market.

For long positions:

Buy pound when the quote reaches 1.1692 (green line on the chart) and take profit at the price of 1.1729 (thicker green line on the chart). Although there is little chance for a rally today, an upward correction could still happen, especially if the pair goes beyond 1.1692.

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 1.1669, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1692 and 1.1729.

For short positions:

Sell pound when the quote reaches 1.1669 (red line on the chart) and take profit at the price of 1.1628. Pressure could return at any moment, especially after an unsuccessful attempt to update today's high at 1.1692.

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 1.1692, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1669 and 1.1628.

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.