FX.co ★ Analysis and trading tips for GBP/USD on May 23

Analysis of transactions and tips for trading GBP/USD

The test of 1.2446 coincided with the time that the MACD line had just started to go down from zero, which was a good reason to sell. This resulted in a price decrease of approximately 30 pips.

GBP/USD could be volatile today as parliamentary hearings on the Bank of England's monetary policy report are scheduled, and Bank of England Governor Andrew Bailey is expected speak. His speech on combating inflation should encourage more purchases in pound. However, data on business activity in both manufacturing and service sector are likely to affect the market as well, depending on what the May figures will be. Better-than-expected numbers are another reason to buy the pair.

For long positions:

Buy pound when the level of 1.2438 (green line on the chart) is reached and take profit at the price of 1.2438 (thicker green line on the chart). Growth could occur after positive economic data. However, before buying, traders should 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 1.2414, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2438 and 1.2476.

For short positions:

Sell pound when the level of 1.2414 (red line on the chart) is reached and take profit at the price of 1.2385. Pressure will increase after unsuccessful attempts at correction. However, before selling, traders should make sure that 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 1.2438, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2414 and 1.2385.

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.