FX.co ★ Analysis and trading tips for GBP/USD on December 12

Analysis of transactions in the GBP / USD pair

The test of 1.2276 occurred at a time when the MACD line moved up a lot from zero, which limited the upside potential of the pair. Sometime later, another test took place, but this time pound rose by more than 40 pips because the MACD line had just started to climb above zero again.

Dollar rose last Friday due to the strong rise in US PPI. However, the bullish moment did not last long as GBP/USD almost returned to lows during today's Asian session.

A lot of UK statistics are expected, such as the manufacturing output report and GDP data, which are the main indicators that will affect the market. Weak figures are likely to prompt declines and updates to lows. The UK trade balance will be of little interest, as is the US federal budget execution report. Expect lower volatility and trading volume, especially in the afternoon.

For long positions:

Buy pound when the quote reaches 1.2245 (green line on the chart) and take profit at the price of 1.2285 (thicker green line on the chart). Growth will resume if there are very good statistics. But remember that when buying, the MACD line should be above zero or is starting to rise from it. Pound can also be bought at 1.2217; however, the MACD line should be in the oversold area as only by that will the market reverse to 1.2245 and 1.2285.

For short positions:

Sell pound when the quote reaches 1.2217 (red line on the chart) and take profit at the price of 1.2184. Pressure will return if reports indicate a strong GDP contraction in the last month and quarter. But 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 1.2245; however, the MACD line should be in the overbought area as only by that will the market reverse to 1.2217 and 1.2184.

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.