Analysis of transactions in the GBP / USD pair

GBP/USD tested 1.2122 yesterday. At that time, the MACD line was far from zero, so the downside potential was limited. Shortly after, it moved to 1.2180, but since the MACD line was still away from zero, the upside potential was also limited. No other signal appeared for the rest of the day.

UK's Q1 GDP coincided with the forecasts, but there was plenty of negative data around it. Firstly, inflation-adjusted household incomes fell 0.2% in the first three months of this year - the fourth consecutive quarter of decline. And although domestic product rose 0.8% and output remained 0.7% above pre-pandemic levels, the figures were declining, making the Bank of England see further downturn in the second quarter. The trade deficit also widened sharply to £51.7bn, which is, 8.3% of GDP per quarter.

Just ahead are important reports that could further drive the market, such as the business activity data in the UK. A decrease in the figure will put more pressure on the pound, leading to a deeper fall in GBP/USD. In the afternoon, the US will release data on business activity and employment in the manufacturing sector, which, if exceed expectations, will lead to a surge in market volatility. This will continue the pressure in the pair.

For long positions:

Buy pound when the quote reaches 1.2154 (green line on the chart) and take profit at the price of 1.2206 (thicker green line on the chart). There is a chance for a rally today, but only if data on the UK economy exceeds expectations. Also, remember that when buying, the MACD line should be above zero, or is starting to rise from it. It is also possible to buy at 1.2115, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.2154 and 1.2206.

For short positions:

Sell pound when the quote reaches 1.2115 (red line on the chart) and take profit at the price of 1.2055. Pressure will return if there is no bullish activity at the lows and if the UK releases weak economic statistics. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.2154, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2115 and 1.2055.

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.