GBP/USD: Tips for Beginner Traders on December 23rd (U.S. Session)

[Ben Graham]

Trade review and trading advice for the British pound

The test of the 1.3494 price level occurred at the 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 almost reached the target level around 1.3520.

Amid the absence of any UK economic data, the British pound continued to follow the upward trend. The lack of fundamental drivers left the initiative in the hands of technical traders, who apparently decided to take advantage of dollar weakness and low liquidity ahead of important U.S. data.

In the second half of the day, reports will be released on changes in U.S. GDP for the third quarter of this year, the core Personal Consumption Expenditures (PCE) index, changes in durable goods orders, changes in industrial production, and the consumer confidence indicator. This data will undoubtedly have a significant impact on the markets. Any unexpected results that deviate from forecasts may trigger volatility and a reassessment of risks. In particular, close attention will be paid to the Personal Consumption Expenditures index. This indicator, monitored by the Federal Reserve, is its preferred measure of inflation. If PCE data show persistent inflationary pressure, the Fed may consider adopting a more restrictive stance on interest rates early in the year. The consumer confidence indicator will provide insight into consumer sentiment, which drives a large share of economic growth. Optimistic consumers tend to spend more, stimulating economic activity and supporting the U.S. dollar.

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 1.3516 (green line on the chart), with a growth target at 1.3567 (the thicker green line on the chart). Around 1.3567, I will exit long positions and open short positions in the opposite direction, aiming for a 30–35 point move from that level. Pound appreciation today can be expected within the framework of the morning trend.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 event of two consecutive tests of the 1.3495 price level while 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. A rise toward the opposite levels of 1.3516 and 1.3567 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell the pound after a break below (renewal of) the 1.3495 level (red line on the chart), which would lead to a quick decline in the pair. The key target for sellers will be the 1.3458 level, where I will exit short positions and also open long positions in the opposite direction, aiming for a 20–25 point move from that level. Pressure on the pound may return today in the event of strong U.S. economic data.Important! Before selling, make sure 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 event of two consecutive tests of the 1.3516 price level while 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 1.3495 and 1.3458 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 rely on overbought and oversold zones.

Important. Beginner Forex traders should be extremely cautious when making entry decisions. Before the release of major 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-loss orders to minimize losses. Without stop-loss orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

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

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