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Analysis and trading tips for GBP/USD on December 23

Analysis of transactions in the GBP / USD pair

Market signals on Wednesday said to buy GBP / USD, however, the MACD line was far from zero so the increase was very limited. The same thing happened around mid-day, but this time amid a signal to sell. There was no downward movement so bears saw losses. No other signal appeared for the rest of the day.

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The latest GDP data in the UK could be interpreted in different ways. On a yearly basis, the economy grew, but the final estimate for the 3rd quarter was worse than the preliminary data. According to the Office for National Statistics, the figure is down 1.5% from Q4 of 2019. Q3, meanwhile, is up 1.1% from the preliminary estimate of 1.3%. All in all, the economy grew 6.8% y / y, against a preliminary forecast of 6.6%.

The US GDP data was revised for the better, but it did not provide much support to the US dollar.

There is no UK data to be released today, so traders will put all their attention to US reports in the afternoon. These are: volume of orders for durable goods, income and expenses of the population, first-time jobless claims and consumer sentiment. If the figures turn out much better than expected, demand for dollar will surge.

For long positions:

Buy pound when the quote reaches 1.3367 (green line on the chart) and take profit at the price of 1.3402 (thicker green line on the chart). Growth will occur only after the breakout of December highs. That will happen if the situation with coronavirus improves.

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 1.3340, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3367 and 1.3402.

For short positions:

Sell pound when the quote reaches 1.3340 (red line on the chart) and take profit at the price of 1.3305. Strong US data will lead to a decline in the pair in the afternoon.

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 1.3367, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3340 and 1.3305.

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

The material has been provided by InstaForex Company - www.instaforex.com

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