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Analysis and trading tips for GBP/USD on April 20

Relevance up to 02:00 2022-04-21 UTC–4

Analysis of transactions in the GBP / USD pair

A signal to buy emerged after GBP/USD hit 1.3012. However, there was no sharp increase because the MACD line being far from zero limited the upside potential of the pair. It only rose by 20 pips before turning down again. In the afternoon, another test of the level took place, but the same scenario occurred as the MACD line was still far from zero. No other signal appeared for the rest of the day.

Demand for dollar rose yesterday because of the statements made by FOMC member Charles Evans. However, it did not lead to a sharp sell-off in GBP/USD because few people want to do it at the current lows.

There is no UK data today, so buyers can take advantage of this moment to push to new weekly highs. In the afternoon, there will be a report on the US secondary housing market, but that is unlikely to have any effect. Instead, traders should focus on the statements of FOMC members Mary Daly and Charles Evans, which could hint at a half-point rate hike next month.

For long positions:

Buy pound when the quote reaches 1.3036 (green line on the chart) and take profit at the price of 1.3069 (thicker green line on the chart). There is a chance for a rally today, but it will be limited because of the current state of the economy and high inflation, which the Bank of England is in no hurry to fight. In any case, when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3013, but the MACD line should be in the oversold area as only by that will the market reverse to 1.3036 and 1.3069.

For short positions:

Sell pound when the quote reaches 1.3013 (red line on the chart) and take profit at the price of 1.2982. Pressure is likely to return on the market, especially given how traders feel about the US dollar right now. However, 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 1.3036, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3013 and 1.2982.

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 market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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