FX.co ★ Analysis and trading tips for GBP/USD on May 17 (US session)

GBP/USD continued to fall. However, the test of 1.2447 coincided with the time that the MACD line was already far from zero, so the downside potential was limited.

Ahead are reports on the US housing market, particularly on the volume of building permits issued and the number of new foundations laid. Better-than-expected numbers could lead to a surge in volatility, while a drop on the former, most likely due to high interest rates and a reduction in lending, could lead to the further weakness of dollar and correction of pound upwards.

For long positions:

Buy pound when the quote reaches 1.2487 (green line on the chart) and take profit at the price of 1.2536 (thicker green line on the chart). Growth will be seen if there is weak data from the US. However, before buying, make sure that the MACD line is above zero and is starting to rise from it. Pound can also be bought after the level of 1.2444 is tested twice, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2487 and 1.2536.

For short positions:

Sell pound when the quote reaches 1.2444 (red line on the chart) and take profit at the price of 1.2400. Pressure could return if there is strong housing market report in the US. However, before selling, make sure that the MACD line is below zero and is starting to drop down from it. Pound can also be sold after the level of 1.2487 is tested twice, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2444 and 1.2400.

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.