GBP/USD: Tips for Beginner Traders on January 12th (US Session)

[Ben Graham]

Trade review and tips for trading the British pound

The test of the 1.3422 price level occurred at a moment when the MACD indicator had already moved significantly above the zero line, which limited the pair's upward potential. For this reason, I did not buy the pound. The second test of this price level occurred when the MACD was in overbought territory, which led to the implementation of Sell Scenario No. 2. However, the pair ultimately failed to move lower.

During the US session, attention will shift to a speech by FOMC member Thomas Barkin. Barkin's remarks may shed light on the Federal Reserve's future plans regarding interest rates, although I believe it is already clear to many that the regulator will leave rates unchanged at the meeting at the end of this month. Traders and analysts will closely monitor Barkin's statements, trying to assess how sustainable the recent decline in unemployment is and how it may affect inflation. If Barkin expresses concern about the labor market, this could push the Fed toward a more dovish stance on rates, which in turn could further weaken the US dollar.

As for the intraday strategy, I will primarily rely 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 1.3483 (thin green line on the chart), with a growth target at 1.3520 (thicker green line on the chart). Around 1.3520, I plan to exit long positions and open short positions in the opposite direction (aiming for a move of 30–35 points in the opposite direction from that level). Pound growth today can be expected to continue the morning trend.Important: Before buying, make sure that 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 1.3455 level when 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 1.3483 and 1.3520 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after an update of the 1.3455 level (red line on the chart), which would lead to a quick decline in the pair. The key target for sellers will be the 1.3417 level, where I will exit short positions and also immediately open long positions in the opposite direction (aiming for a move of 20–25 points in the opposite direction from that level). Pressure on the pound may return today if Barkin takes a hawkish stance.Important: Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today in the case of two consecutive tests of the 1.3483 level when 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 1.3455 and 1.3417 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 at which Take Profit can be set 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 at which Take Profit can be set 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 should be extremely cautious when making market entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop-loss orders, you can very quickly lose your entire deposit, 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