FX.co ★ Analysis and trading tips for GBP/USD on June 21 (US session)

The test of 1.2756, coinciding with the drop of the MACD line from zero, prompted a sell signal that led to a price decrease of over 50 pips.

Rising UK inflation stimulated demand for pound, but this could not stop the downward correction ahead of the Bank of England meeting. Accordingly, massive sell-offs occurred in GBP/USD by midday. However, any significant correction in pound could be an excellent opportunity to buy.

Market players will focus on the speech of Fed Chairman Jerome Powell, so there should be some movement. Statements regarding further efforts to combat inflation and the high likelihood of interest rate hikes should provoke a decline in pound and an increase in dollar. But if Powell chooses a more dovish position, the pair will return to growth.

For long positions:

Buy when pound hits 1.2763 (green line on the chart) and take profit at the price of 1.2825 (thicker green line on the chart). Growth may start at any moment, especially in the case of dovish statements from the Federal Reserve. However, when buying, traders should make sure that the MACD line lies above zero or rises from it. Pound can also be bought after two consecutive price tests of 1.2695, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2763 and 1.2825.

For short positions:

Sell when pound reaches 1.2695 (red line on the chart) and take profit at the price of 1.2632. Pressure will increase after hawkish statements from Jerome Powell. However, when selling, traders should make sure that the MACD line lies below zero or drops down from it. Pound can also be sold after two consecutive price tests of 1.2763, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2695 and 1.2632.

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.