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24.01.2023 09:25 AM
Analysis and trading tips for GBP/USD on January 24

Analysis of transactions and tips for trading GBP/USD

The test of 1.2386 occurred when the MACD line was already far from zero, so the downside potential was limited. Meanwhile, buying on a rebound from 1.2338 brought about a price increase of as much as 40 pips. No other signals appeared for the rest of the day.

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Ahead are key reports on manufacturing and services sector activity indices, which will give an indication of where the UK economy is heading into 2023 and how robust its growth will be. If it shows weak figures, pressure on pound will intensify, especially as the US will also release similar reports in the afternoon, but with an added composite PMI and Fed-Richmond manufacturing index. Rising numbers will lead to a stronger dollar and further downward correction in GBP/USD.

For long positions:

Buy pound when the quote reaches 1.2406 (green line on the chart) and take profit at the price of 1.2445 (thicker green line on the chart). The trend that was observed last week could continue today as long as the upcoming PMI data for the UK exceeds expectations. Also, make sure that when buying, the MACD line is above zero or is starting to rise from it. Pound can be bought at 1.2374, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2406 and 1.2445.

For short positions:

Sell pound when the quote reaches 1.2374 (red line on the chart) and take profit at the price of 1.2325. Pressure will increase if the UK reports a poor service sector reading. However, make sure that when selling, the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.2406, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2374 and 1.2325.

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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 decision based on the current market situation is an inherently losing strategy for an intraday trader.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2024
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