GBP/USD: Tips for Beginner Traders on December 19th (U.S. Session)

[Ben Graham]

Trade Breakdown and Trading Tips for the British Pound

The test of the 1.3369 price level occurred when the MACD indicator was just beginning to move down from the zero line, which confirmed a correct entry point for selling the pound. However, the pair did not go on to post a major decline.

Despite the fact that UK retail sales fell by 0.1% in November this year, the pound barely reacted. Although the data came as an unpleasant surprise to the market, which had been expecting confirmation of resilient consumer demand.

In the second half of the day, the focus will shift to U.S. existing home sales data, as well as the consumer sentiment index and inflation expectations from the University of Michigan. These figures will serve as important indicators of the state of the U.S. economy and consumer confidence. Existing home sales are traditionally viewed as a leading indicator of economic activity. The University of Michigan Consumer Sentiment Index will provide insight into how Americans assess the current economic situation and what expectations they have for the future. If the figures come in worse than expected, this could lead to a decline in the U.S. dollar and a strengthening of the British pound.

As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy the pound upon reaching the entry point around 1.3392 (green line on the chart), targeting a rise to the 1.3414 level (the thicker green line on the chart). Around 1.3414, I plan to exit long positions and open sell positions in the opposite direction (targeting a 30–35 point move in the opposite direction from that level). Pound gains today can only be expected after weak U.S. data. Important: Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the case of two consecutive tests of the 1.3372 level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. Growth can be expected toward the opposite levels of 1.3392 and 1.3414.

Sell Signal

Scenario No. 1: I plan to sell the pound today after an update of the 1.3372 level (red line on the chart), which should lead to a quick decline in the pair. The key target for sellers will be the 1.3350 level, where I plan to exit sell positions and immediately open buy positions in the opposite direction (targeting a 20–25 point move in the opposite direction from that level). Pressure on the pound could return at any moment today. Important: Before selling, make sure the MACD indicator is below the zero line and is just beginning to fall from it.

Scenario No. 2: I also plan to sell the pound today in the case of two consecutive tests of the 1.3392 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decline toward the opposite levels of 1.3372 and 1.3350 can be expected.

What's on the Chart:

• Thin green line – entry price at which the instrument can be bought;
• Thick green line – estimated price where Take Profit can be set or profits can be manually locked in, as further growth above this level is unlikely;
• Thin red line – entry price at which the instrument can be sold;
• Thick red line – estimated price where Take Profit can be set or profits can be manually locked in, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to focus on overbought and oversold zones.

Important: Beginner Forex traders must be extremely cautious when making market entry decisions. Ahead of major fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

And remember: successful trading requires a clear trading plan, like the one presented above. Making 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