GBP/USD: Tips for Beginner Traders on December 12th (U.S. Session)

[Ben Graham]

Trade analysis and guidance on trading the British pound

The first test of the 1.3386 price level occurred when the MACD indicator had just begun moving downward from the zero line, which confirmed a correct entry point for selling the pound. As a result, the pair dropped toward the target level of 1.3366.

According to the data, UK GDP declined by 0.1% in October this year, which led to the pound's fall during the first half of the day. Although the contraction in GDP is not catastrophic, it is yet another signal of the economic slowdown that began several months ago. It is important to note that this decrease occurred amid a relatively stable global economy and the absence of major external shocks. This suggests that the UK's issues are likely internal and related to factors such as high inflation, high interest rates, and political challenges.

During the U.S. session, there is no economic data scheduled for release. Instead, attention will be drawn to interviews and speeches by FOMC members. The impact of Fed officials' rhetoric may be quite significant — but only if expectations for interest-rate cuts rise substantially. Otherwise, hawkish signals may strengthen the U.S. dollar toward the end of the week.

As for the intraday strategy, I will rely mainly on scenarios #1 and #2.

Buy Signal

Scenario #1:

I plan to buy the pound today when the price reaches the entry point around 1.3383 (green line on the chart), targeting a rise toward 1.3408 (the thicker green line on the chart). Near 1.3408, I will close long positions and open short positions in the opposite direction (aiming for a 30–35-point move from the level). Pound appreciation today can be expected only after a dovish stance from the Fed. Important! Before buying, make sure the MACD indicator is above the zero line and only beginning to rise from it.

Scenario #2:

I also plan to buy the pound today if the price tests 1.3362 twice while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a reversal upward. A rise toward the opposite levels of 1.3383 and 1.3408 can be expected.

Sell Signal

Scenario #1:

I plan to sell the pound today after the price breaks below 1.3362 (red line on the chart), which should quickly push the pair lower. The key target for sellers will be 1.3345, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25-point rebound from the level). Downward pressure on the pound may return today if Fed rhetoric turns hawkish. Important! Before selling, make sure the MACD indicator is below the zero line and only beginning its decline.

Scenario #2:

I also plan to sell the pound today if the price tests 1.3383 twice while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a reversal downward. A decline toward the opposite levels of 1.3362 and 1.3345 can be expected.

What is shown on the chart:

• Thin green line – entry price level where you can buy the trading instrument
• Thick green line – projected level for placing Take Profit or manually fixing profits, as further growth above this level is unlikely
• Thin red line – entry price level where you can sell the trading instrument
• Thick red line – projected level for placing Take Profit or manually fixing profits, as further decline below this level is unlikely
• MACD indicator – when entering the market, it is important to rely on overbought and oversold zones

Important Note for Beginners

Beginner Forex traders must be extremely cautious when deciding to enter the market. Before major fundamental reports are released, it is best to stay out of the market to avoid sudden price swings. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you can lose your entire deposit very quickly, especially if you ignore money-management rules and trade large volumes.

And remember: to trade successfully, you need a clear trading plan, like the one provided above. Spontaneous trading decisions based on momentary market conditions are, from the start, a losing strategy for an intraday trader.

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