GBP/USD: Simple Trading Tips for Beginner Traders on February 20. Analysis of Yesterday's Forex Trades

[Ben Graham]

Analysis of Trades and Tips for Trading the British Pound

The price test at 1.3482 coincided with the MACD indicator falling significantly from the zero mark, limiting the pair's downward potential. For this reason, I did not sell the pound.

The pound fell sharply against the dollar after the release of positive U.S. labor market data. Data reflecting the labor market's gradual return to normal only exacerbated pressure on the British currency, as observed throughout the current trading week.

The decline in the British currency is likely to continue today if the published economic indicators turn out worse than expected. An unexpectedly strong decline in the PMI Services index could be disastrous for the pound. Conversely, positive results in the services sector may help the pair with a slight recovery. However, one should not forget the other reports related to retail sales in the UK and the PMI index for the manufacturing sector. Nothing good is anticipated from these data.

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

Buy Scenarios

• Scenario #1: I plan to buy the pound today upon reaching an entry point around 1.3453 (green line on the chart), targeting a move to 1.3488 (thicker green line on the chart). At the level of 1.3488, I intend to exit the long positions and open shorts in the opposite direction, expecting a movement of 30-35 pips from the entry point. Growth in the pound today can only be anticipated following good data. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.
• Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3435 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. Growth toward opposing levels of 1.3453 and 1.3488 can be expected.

Sell Scenarios

• Scenario #1: I plan to sell the pound today after breaking below the level of 1.3435 (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers will be the 1.3402 level, where I intend to exit the shorts and buy back immediately in the opposite direction, anticipating a move of 20-25 pips from the level. Sellers of the pound will manifest in the event of poor data. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to decline from it.
• Scenario #2: I also plan to sell the pound today if there are two consecutive tests of 1.3453 when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decrease toward opposing levels of 1.3435 and 1.3402 can be expected.

What's on the Chart:

The thin green line represents the entry price at which one can buy the trading instrument;

The thick green line represents the approximate price where one can set Take Profit or secure profits, as further growth above this level is unlikely;

The thin red line represents the entry price at which one can sell the trading instrument;

The thick red line represents the approximate price where one can set Take Profit or secure profits, as further decline below this level is unlikely;

The MACD indicator: when entering the market, it is important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market should be very careful when making entry decisions. It is best to stay out of the market before important fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember, for successful trading, it is essential to have a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.

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