FX.co ★ Analysis and trading tips for GBP/USD on December 14

Analysis of transactions and tips for trading GBP/USD

Further decline became limited because the test of 1.2505 occurred during the sharp downward move of the MACD line from zero. As for the test of 1.2536 in the afternoon, it coincided with the rise of the MACD line from zero, which provoked a buy signal and resulted in a price increase of over 50 pips.

Fed Chairman Jerome Powell took a dovish stance on interest rates, stating that no one else intends to raise them. He also hinted at a minimum of four rate cuts in the coming year, which led to a strong sell-off of dollar and a rise in pound.

The Bank of England will announce its own decision on interest rates soon, but many remain unsure of what to expect, especially after weak labor market and GDP statistics from the UK. If the position remains firm, then pound will continue to rise. The distribution of votes, as well as the summary of monetary policy, will also be important as it will affect the further direction of the pair.

For long positions:

Buy when pound hits 1.2650 (green line on the chart) and take profit at the price of 1.2703 (thicker green line on the chart). Growth will occur only after a firm stance by the Bank of England.

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 1.2614, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2650 and 1.2703.

For short positions:

Sell when pound reaches 1.2614 (red line on the chart) and take profit at the price of 1.2575. Pressure will return if the Bank of England takes a very dovish position on interest rates. An unsuccessful attempt to consolidate around the local daily high will also lead to a decline.

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 1.2650, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2614 and 1.2575.

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.