FX.co ★ Analysis and trading tips for GBP/USD on August 31

Analysis of transactions and tips for trading GBP/USD

The test of 1.2670 on Wednesday afternoon, coinciding with the rise of the MACD line from zero, prompted a buy signal that led to a price increase of around 35 pips. Selling on a rebound from 1.2712, meanwhile, resulted in losses.

Data on the M4 money supply aggregate, approved mortgage loan applications, and net loans to private individuals did not influence pound much, while the labor market report from the ADP, which came out worse than expected, led to a strong surge in GBP/USD upwards. This bullish momentum may continue today, as nothing important will happen, besides the speech of Bank of England MPC member Huw Pill. The statements will unlikely influence the market's direction.

For long positions:

Buy when pound hits 1.2726 (green line on the chart) and take profit at the price of 1.2759 (thicker green line on the chart). Growth will occur as part of the ongoing upward trend. However, when buying, ensure that the MACD line lies above zero or just starts to rise from it.

Pound can also be bought after two consecutive price tests of 1.2694, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2726 and 1.2759.

For short positions:

Sell when pound reaches 1.2694 (red line on the chart) and take profit at the price of 1.2670. Pressure will increase in the case of inactivity at local highs. However, when selling, ensure that the MACD line lies below zero or drops down from it.

Pound can also be sold after two consecutive price tests of 1.2726, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2694 and 1.2670.

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.