Relevance up to 06:00 2022-01-21 UTC+00
Analysis of transactions in the GBP / USD pair
GBP/USD reached 1.3607 at a time when the MACD line was in the overbought area. That prompted a signal to sell in the market, which led to a 15-pip decrease in the pair. After a while, the same situation emerged, however, the indicator moved above zero, so the signal was to buy pound. That led to a 40-pip increase in the pair. Sell-offs in the afternoon led to a 20-pip correction in GBP/USD.
Pound rose on Wednesday, thanks to the sharp jump in UK inflation. Statements from Bank of England chief Andrew Bailey also increased the confidence of buyers that the central bank will raise rates as early as February this year. Meanwhile, reports on the US housing market were ignored by traders.
Today, the UK will release data on industrial orders, but that is unlikely to have any effect on the market. In the afternoon, the US will report weekly jobless claims and manufacturing activity in the Philadelphia Fed. It is best to take short positions as pressure on risky assets is gradually increasing due to the Fed policy.
For long positions:
Buy pound when the quote reaches 1.3637 (green line on the chart) and take profit at the price of 1.3670 (thicker green line on the chart). Growth will continue if the Bank of Englands takes a more aggressive approach on monetary policy.
Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3617, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.3637 and 1.3670.
For short positions:
Sell pound when the quote reaches 1.3617 (red line on the chart) and take profit at the price of 1.3573. Pressure will return if demand for risky assets decreases and the Fed announces changes in its monetary policy.
Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.3637, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3617 and 1.3573.
What’s on the chart:
The thin green line is the key level at which you can place long positions in the GBP/USD pair.
The thick green line is the target price, since the quote is unlikely to move above this level.
The thin red line is the level at which you can place short positions in the GBP/USD pair.
The thick red line is the target price, since the quote is unlikely to move below this level.
MACD line – when entering the market, it is important to be guided by the overbought and oversold zones.
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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
Benefit from analysts’ recommendations right now
Top up trading account
Open trading account
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.