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

[Ben Graham]

Trade Review and Trading Advice for the British Pound

The test of the 1.3435 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 by only 9 points, after which the bullish potential was exhausted.

Data showing UK GDP growth of 0.3% in November of last year did not provide significant support for the pound. Apparently, traders maintained a cautious approach, waiting for clearer signals from the Bank of England regarding future monetary policy. Despite moderate improvement in economic indicators, concerns about persistent inflation and a potential recession continued to weigh on the market.

Today's data on initial jobless claims will serve as an important indicator of the state of the labor market. A steady decline in claims may indicate economic strength and potential inflationary pressure. At the same time, an unexpected increase could point to slowing economic growth and the possible need for further monetary easing by the Fed. The Philadelphia Fed Manufacturing Index is a leading indicator of economic activity in the manufacturing sector. Investors will closely monitor this reading to assess the outlook for economic growth in the country.

The session will conclude with speeches by FOMC members Bostic and Barkin, which may provide valuable insight into the current state of the economy and the outlook for Federal Reserve monetary policy.

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 if the price reaches the entry point around 1.3427 (thin green line on the chart), with a target of growth toward the 1.3451 level (thicker green line on the chart). Around 1.3451, I will exit long positions and open short positions in the opposite direction (aiming for a 30–35 point move in the opposite direction from that level). A rise in the pound today can be expected only after dovish comments from Fed officials.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 event of two consecutive tests of the 1.3412 price level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 1.3427 and 1.3451 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after a break below the 1.3412 level (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers will be the 1.3393 level, where I will exit short positions and also open long positions in the opposite direction (aiming for a 20–25 point move in the opposite direction from that level). Pressure on the pound may return today in the event of strong U.S. data.Important: Before selling, make sure that the MACD indicator is below the zero line and is just beginning to fall from it.

Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of the 1.3427 price level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.3412 and 1.3393 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 manually locked in, 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 manually locked in, 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 make market entry decisions with extreme caution. 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 very quickly lose your entire deposit, especially if you do not use proper 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