FX.co ★ Analysis and trading tips for GBP/USD on May 2

Analysis of transactions and tips for trading GBP/USD

Due out today is the data on manufacturing activity in the UK. Negative changes will lead to movements beyond the sideways channel, most likely prompting a new sell-off in the market. Meanwhile, good numbers will restore demand, which will lead to a surge in GBP/USD upwards.

The economic calendar in the US is empty today, so it is likely that volatility will decrease, which will result in trading within a sideways channel. Reports on the volume of manufacturing orders and level of vacancies and labor force turnover are unlikely to change the balance of power in the market.

For long positions:

Buy pound when the level of 1.2511 (green line on the chart) is reached and take profit at the price of 1.2549 (thicker green line on the chart). Growth will be seen if the upcoming UK reports exceed expectations. However, before buying, make sure that the MACD line is above zero or is starting to rise from it. Pound can also be bought after two consecutive price tests of 1.2489, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2511 and 1.2549.

For short positions:

Sell pound when the level of 1.2489 (red line on the chart) is reached and take profit at the price of 1.2450. Pressure will return if data on the UK manufacturing activity is weaker than expected. However, make sure that before selling, the MACD line is below zero or is starting to move down from it. Pound can also be sold after two consecutive price tests of 1.2511, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2489 and 1.2450.

What's on the chart:

Thin green line - entry price at which you can buy GBP/USD

Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely.

Thin red line - entry price at which you can sell GBP/USD

Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely.

MACD line- it is important to be guided by overbought and oversold areas when entering the market

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.