06.01.202312:02 Forex Analysis & Reviews: Analysis and trading tips for GBP/USD on January 6

Analysis of transactions in the GBP / USD pair

The first test of 1.2007 occurred when the MACD line was far below zero, so the downside potential was limited. Sometime later, another test took place, but this time the MACD line was already in the oversold area, which is a pretty good signal to buy. It resulted in a price increase of about 20 pips. The third test of 1.2007 also gave a signal to buy, prompting a rise of over 80 pips.

Thursday's PMI data in the UK did not allow pound to gain much yesterday morning, then the strong US labor market report in the afternoon dashed buyers' hopes and brought the pair down during the US session.

There is only one report scheduled for today, that is, the PMI data for the construction sector in the UK, which is unlikely to be decisive in the current situation. Much more important is the US data on the unemployment rate and non-farm payrolls, which will certainly determine the pair's direction. Better-than-expected figures will cause GBP/USD to fall to new monthly lows. A good reading on the service sector business activity index is likely to lead to an even bigger downward move in the pair.

For long positions:

Buy pound when the quote reaches 1.1937 (green line on the chart) and take profit at the price of 1.2007 (thicker green line on the chart). Growth will occur if data on PMI is strong. But take note that when buying, the MACD line should be above zero or is starting to rise from it. Pound can also be bought at 1.1888, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.1937 and 1.2007.

For short positions:

Sell pound when the quote reaches 1.1888 (red line on the chart) and take profit at the price of 1.1825. Pressure will return if the US reports strong labor market statistics. But take note that when selling, the MACD line should be below zero or is starting to move down from it. Pound can also be sold at 1.1937, however, the MACD line should be in the overbought area as only by that will the market reverse to 1.1888 and 1.1825.

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.