GBP/USD: Tips for Beginner Traders on October 1st (U.S. Session)

[Ben Graham]

Trade Analysis and Advice on Trading the British Pound

The test of 1.3472 occurred when the MACD indicator had already moved far above the zero line, which limited the pair's upward potential. For this reason, I did not buy the pound. The second test of 1.3472 coincided with MACD being in the overbought area, which triggered scenario #2 for selling.

The UK Manufacturing PMI released today confirmed analysts' forecasts, providing no momentum for further GBP/USD growth. The data matched expectations, indicating no unexpected changes in the country's manufacturing activity. This anticipated outcome nullified previous attempts of the pound to strengthen against the U.S. dollar. Traders had likely priced in the expected PMI level, so the actual figure did not lead to a reassessment of the pound's outlook.

For further upside in GBP/USD later in the day, U.S. data will be key: the ADP employment change report and the ISM Manufacturing Index. Investors will closely examine these figures for hints on the state of the U.S. economy. However, it should be noted that only significantly weak U.S. data can spark a strong wave of pound buying. Otherwise, even moderately negative or neutral results are unlikely to have a meaningful impact on the pair.

The ISM Manufacturing Index will also be in focus. A reading below expectations could heighten concerns about slowing U.S. economic growth, pushing investors toward safer assets, including the British pound.

As for the intraday strategy, I will focus mainly on scenarios #1 and #2.

Buy Signal

Scenario #1: Today, I plan to buy the pound at the entry point near 1.3474 (green line on the chart) with a target at 1.3514 (thicker green line on the chart). Around 1.3514, I will exit long positions and open shorts in the opposite direction (expecting a 30–35-point pullback). A strong pound rally can be expected after weak U.S. data.Important! Before buying, make sure the MACD indicator is above zero and just starting to rise from it.

Scenario #2: I also plan to buy the pound if there are two consecutive tests of 1.3453 while MACD is in the oversold area. This would limit the pair's downward potential and trigger a reversal upward. Growth toward 1.3474 and 1.3514 can then be expected.

Sell Signal

Scenario #1: Today, I plan to sell the pound after a break below 1.3453 (red line on the chart), which will trigger a quick decline. The key bearish target will be 1.3419, where I will exit shorts and open longs in the opposite direction (expecting a 20–25-point pullback). The pound may drop sharply in the second half of the day after strong U.S. data.Important! Before selling, make sure the MACD indicator is below zero and just starting to decline from it.

Scenario #2: I also plan to sell the pound if there are two consecutive tests of 1.3474 while MACD is in the overbought area. This would limit the pair's upward potential and trigger a reversal downward. A decline toward 1.3453 and 1.3419 can then be expected.

What's on the chart:

• Thin green line – entry price for buying the instrument;
• Thick green line – suggested price for setting Take Profit or closing manually, as further growth above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – suggested price for setting Take Profit or closing manually, as further decline below this level is unlikely;
• MACD indicator – when entering the market, rely on overbought and oversold zones.

Important: Beginner Forex traders must be very cautious when making entry decisions. Before major fundamental reports, it is best to stay out of the market to avoid sharp fluctuations. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you skip money management and trade large volumes.

And remember, successful trading requires a clear trading plan like the one presented above. Spontaneous decision-making based solely on the current market situation is an inherently losing intraday trading strategy.

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