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

Analysis of transactions in the GBP / USD pair

The first test of 1.2137 occurred when the MACD line was quite far from zero, which limited the downside potential of the pair. Sometime later, another test took place, but this time the MACD line was already recovering from the oversold area, which seemed to be a good signal to buy. Unfortunately, the pound continued to decline, leading to further losses. No other signals appeared for the rest of the day.

Once again, there are no statistics scheduled to be released in the UK today, so the upward trend may be limited in the morning. Players should also not rush into the market as ahead is the US CPI data for the month of December, which will likely show a slowdown, prompting a rise in GBP/USD beyond the monthly highs. The speech of FOMC member Patrick Harker and the weekly US jobless claims data will not be of much interest.

For long positions:

Buy pound when the quote reaches 1.2169 (green line on the chart) and take profit at the price of 1.2245 (thicker green line on the chart). Growth will occur if US inflation is reported to have decreased. But take note that when buying, the MACD line should be above zero or is starting to rise from it. Pound can also be bought at 1.2120, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.2169 and 1.2245.

For short positions:

Sell pound when the quote reaches 1.2120 (red line on the chart) and take profit at the price of 1.2060. Pressure will increase if data shows that inflation in the US continues to rise. 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 1.2169, however, the MACD line should be in the overbought area as only by that will the market reverse to 1.2120 and 1.2060.

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.