GBP/USD: Tips for Beginner Traders on December 22nd (U.S. Session)

[Ben Graham]

Trade Analysis and Tips for Trading the British Pound

The test of the 1.3405 price level occurred at a moment when the MACD indicator was just beginning to move upward from the zero line, which confirmed a correct entry point for buying the pound. As a result, the pair rose to the target level of 1.3425.

Encouraged by data on the growth of the United Kingdom's GDP and a significant inflow of capital, the British pound demonstrated further strengthening against the U.S. dollar. Macroeconomic indicators instilled confidence in investors, allowing GBP to strengthen its positions. The increase in investment volumes had a substantial impact on market sentiment. This is a sign of entrepreneurs' belief in the country's development prospects and additionally stimulates economic progress. Moreover, the growth of investment flows contributes to the creation of new jobs and higher wages, which positively affects consumer purchasing power and overall economic activity.

Today, there will be no U.S. statistics released in the second half of the day, so bulls will have every chance to update the monthly high. However, it is worth remembering that even without official data, the market often reacts to indirect signals and sentiment. Speculative moods can be fueled by rumors, analytical forecasts, or simply the inertia of previous trading sessions. It is important to remember that currency markets are a complex and dynamic instrument where expectations and forecasts play no less important a role than actual figures. Nevertheless, the absence of negative news from the U.S. certainly creates a more favorable environment for buyers of risk assets.

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 the entry point around 1.3439 (the thin green line on the chart), with a growth target at 1.3469 (the thicker green line on the chart). At the level of 1.3469, I will exit long positions and open short positions in the opposite direction (aiming for a move of 30–35 points in the opposite direction from this level). Today, further growth of the pound can be expected within the framework of the morning trend. 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 in the event of two consecutive tests of the 1.3416 price level at a moment when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal of the market upward. Growth toward the opposite levels of 1.3439 and 1.3469 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after an update of the 1.3416 level (the thin red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers will be the 1.3373 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 this level). Pressure on the pound may return at any moment today. 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 in the event of two consecutive tests of the 1.3439 price level at a moment when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal of the market downward. A decline toward the opposite levels of 1.3416 and 1.3373 can be expected.

What's on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price where Take Profit can be set or profits can be fixed manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price where Take Profit can be set or profits can be fixed 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 traders in the Forex market need to be extremely cautious when making decisions about entering the market. Before the release of important 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 orders to minimize losses. Without stop 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