GBP/USD: Tips for Beginner Traders on January 21st (U.S. Session)

[Ben Graham]

Trade Review and Trading Tips for the British Pound

The test of the 1.3430 price level occurred at a moment when the MACD indicator had already moved significantly downward from the zero line, which limited the pair's downward potential. For this reason, I did not sell the pound and missed the entire downward move.

At one point, the pound rose on data showing that annual inflation in the UK turned out to be higher than economists' forecasts and increased to 3.4% year-on-year, but it later returned to a decline against the dollar. The initial optimism triggered by the unexpectedly high inflation figures quickly faded, giving way to a more balanced assessment of the prospects for the British economy. Traders apparently concluded that a one-off surge in inflation is unlikely to fundamentally change the Bank of England's stance on interest rates.

At present, traders have paused in anticipation of statements from Trump, as they could significantly affect the geopolitical situation and economic relations between the United States and Europe. The issue of Greenland, which has recently sparked considerable debate and discussion, has once again come under close scrutiny. It is possible that Trump may once again raise the topic of acquiring the island or establishing special economic cooperation, which could provoke a mixed reaction from Denmark, whose sovereignty over Greenland is not in doubt. As for trade tariffs, the situation could become even more tense if European leaders continue to oppose Trump.

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 1.3422 (green line on the chart), with a growth target at 1.3470 (the thicker green line on the chart). Around 1.3470, I plan to exit long positions and open short positions in the opposite direction (aiming for a 30–35 point move from the level). Further pound growth can also be expected today.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 1.3399 price level while the MACD indicator is in the oversold area. This would limit the pair's downward potential and lead to a reversal upward. A rise toward the opposite levels of 1.3422 and 1.3470 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after a break below the 1.3399 level (red line on the chart), which could lead to a rapid decline in the pair. The key target for sellers will be the 1.3358 level, where I plan to exit short positions and immediately open long positions in the opposite direction (aiming for a 20–25 point move from the level). Pressure on the pound may return today if Trump adopts a dovish stance.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 1.3422 price level while the MACD indicator is in the overbought area. This would limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.3399 and 1.3358 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 level where Take Profit orders can be placed 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 level where Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to focus on overbought and oversold zones.

Important: Beginner Forex traders should be extremely cautious when making market entry decisions. 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 orders to minimize losses. Without stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember, successful trading requires a clear trading plan, like 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