GBP/USD: Tips for Beginner Traders on January 27th (U.S. Session)

[Ben Graham]

Trade Analysis and Tips for Trading the British Pound

The test of the 1.3669 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. The second test of 1.3669 led to the implementation of Buy Scenario No. 2 in line with the trend, resulting in a 30-point rise in the pair.

During the U.S. session, reports are expected on weekly employment changes from ADP in the United States, the Consumer Confidence indicator, and the House Price Index for the 20 largest cities. The U.S. labor market is currently under close scrutiny, and the ADP report will serve as an important benchmark. Investors will analyze the figures for signs of resilience or weakness, as the Federal Reserve closely monitors labor market conditions when determining the future path of interest rates. Weaker-than-expected data may strengthen expectations of further monetary easing, putting pressure on the U.S. dollar.

Consumer confidence data will also be studied quite thoroughly. A high level of consumer confidence usually indicates a willingness to spend, which supports economic growth and may strengthen the dollar. Conversely, a decline in confidence can lead to reduced spending, negatively affecting the economy and weakening the currency.

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 when the price reaches the entry level around 1.3708 (green line on the chart), with a growth target at 1.3735 (the thicker green line on the chart). Around 1.3735, I will exit long positions and open short positions in the opposite direction (expecting a move of 30–35 points in the opposite direction from this level). Pound growth today can be expected after weak data.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 case of two consecutive tests of the 1.3682 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 1.3708 and 1.3735 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell the pound after an update of the 1.3682 level (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 1.3648 level, where I will exit short positions and immediately open long positions in the opposite direction (expecting a move of 20–25 points in the opposite direction from this level). Pressure on the pound will return today if strong economic data is released.Important! Before selling, make sure 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 case of two consecutive tests of the 1.3708 price level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.3682 and 1.3648 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 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 where 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 focus on overbought and oversold zones.

Important. Beginner Forex traders should be very cautious when making market entry decisions. 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 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 an inherently losing strategy for an intraday trader.

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