15. GBP/USD: Tips for Beginner Traders on January 7th (U.S. Session)

[Ben Graham]

Trade Analysis and Trading Tips for the British Pound

The test of the 1.3490 price level occurred at a moment when the MACD indicator had moved well below the zero line, which limited the pair's downward potential. For this reason, I did not sell the pound. The second test of 1.3490 allowed Scenario No. 2 for a buy to be implemented, resulting in a small upward movement of the pair by 10 points.

The drop in the UK construction PMI to 40.1 creates many prerequisites for a slowdown in economic growth. Economists attribute this to a sharp decline in new construction orders caused by growing uncertainty about economic prospects and high interest rates, which discourage developers from starting new projects. The traders' reaction was quite predictable.

Ahead, we are expecting data on the change in employment from ADP, job openings and labor turnover from the Bureau of Labor Statistics, and the ISM Services PMI. ADP, as a barometer of private-sector employment, will provide a preliminary assessment of the overall picture expected in Friday's U.S. Department of Labor report. Another decline in the ADP figure may signal a slowdown in hiring, which in turn would put pressure on the U.S. Federal Reserve. JOLTS data, reflecting the level of job openings and labor turnover, will offer a deeper look at labor supply and demand dynamics. A high level of job openings combined with low turnover may indicate a resilient labor market, where companies are actively seeking employees and workers are not in a hurry to change jobs. The opposite situation, on the contrary, may indicate the onset of a recession, when companies cut vacancies and workers fear layoffs.

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

Buy Signal

Scenario No. 1: I plan to buy the pound today upon reaching an entry point around 1.3513 (thin green line on the chart), with a target of growth toward the 1.3548 level (thicker green line on the chart). Around 1.3548, I will exit long positions and open sell positions in the opposite direction (expecting a 30–35-point move in the opposite direction from the level). Pound growth today can only be expected in the case of very weak U.S. data.Important! Before buying, make sure that the MACD indicator is above the zero line and is just starting to rise from it.

Scenario No. 2: I also plan to buy the pound today if there are two consecutive tests of the 1.3486 price level while the MACD indicator is in oversold territory. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 1.3513 and 1.3548 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after an update of the 1.3486 level (thin red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 1.3455 level, where I will exit sell positions and immediately open buy positions in the opposite direction (expecting a 20–25-point move in the opposite direction from the level). Pressure on the pound may return today in the case of strong U.S. data.Important! Before selling, make sure that the MACD indicator is below the zero line and is just starting to fall from it.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of the 1.3513 price level while the MACD indicator is in overbought territory. This will limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.3486 and 1.3455 can be expected.

What's on the Chart:

• Thin green line – entry price at which the trading instrument can be bought;
• Thick green line – estimated price where Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely;
• Thin red line – entry price at which the trading instrument can be sold;
• Thick red line – estimated price where Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to be guided by 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 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 lose your entire deposit very quickly, especially if you do not use money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.

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