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Analysis and trading tips for GBP/USD on January 7

Analysis of transactions in the GBP / USD pair

GBP / USD reached 1.3517 at a time when the MACD line was far from zero, so the downside potential was limited. After some time, it rose to 1.3538, but the indicator was in the overbought area. This formed a sell signal in the market. However, there was no large movement until the end of the day.

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Activity in the UK services sector offset the decline observed in GBP / USD yesterday. At the same time, jobless claims in the US and weak activity in the service sector limited the downside potential of the currency.

There is no UK data to be released today that is why pound's current trajectory is likely to continue. Even a strong house price index will not affect the direction of GBP / USD.

In the afternoon, the US will release reports on the non-farm sector, where massive growth is expected. If that really happens, the Fed may tighten monetary policy more aggressively this year, which will boost demand for dollar.

For long positions:

Buy pound when the quote reaches 1.3553 (green line on the chart) and take profit at the price of 1.3594 (thicker green line on the chart). Growth will occur if buyers manage to push the pair above the December highs.

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 1.3535, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3553 and 1.3594.

For short positions:

Sell pound when the quote reaches 1.3535 (red line on the chart) and take profit at the price of 1.3494. Weak US data will prompt a decline in GBP / USD.

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 1.3553, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3535 and 1.3494.

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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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