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FX.co ★ GBP/USD: Simple trading tips for novice traders on May 16th (US session)

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Forex Analysis:::2024-05-16T14:27:31

GBP/USD: Simple trading tips for novice traders on May 16th (US session)

Trade analysis and tips for trading the British pound

The initial test of the price at 1.2670 occurred when the MACD indicator had descended significantly from the zero mark, limiting the pair's further downward potential. For this reason, especially against the trend, I refrained from selling. Shortly after, another test at 1.2670 occurred as the MACD recovered from oversold territory, allowing Scenario #2 for buying to materialize. However, significant growth did not materialize this time. The absence of UK statistics did not help the pound. We have important data on the number of initial jobless claims, new building permits, and construction permit volume. Also, keep an eye on changes in US industrial production. A strong fundamental background will lead to a further decline in the pound and strengthening of the dollar. Regarding the intraday strategy, I plan to act based on the realization of Scenarios #1 and #2.

GBP/USD: Simple trading tips for novice traders on May 16th (US session)

Buy Signal

Scenario #1: Today, I plan to buy the pound when the entry point reaches around 1.2674 (green line on the chart), with a target of rising to 1.2713 (thicker green line). At the level of 1.2713, I will exit purchases and open sales in the opposite direction (expecting a movement of 30-35 points in the opposite direction from the level). Pound growth can be expected only after weak US statistics today. Important! Before buying, make sure that the MACD indicator is above the zero mark and is just starting its growth from it.

Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the price at 1.2648 when the MACD indicator is in oversold territory. This will limit the pair's downward potential and lead to a reverse market turn upwards. Expect growth towards the opposite levels of 1.2674 and 1.2713.

Sell Signal

Scenario #1: Today, I plan to sell the pound after updating the level of 1.2648 (red line on the chart), leading to a rapid decline in the pair. The key target for sellers will be the level of 1.2615, where I will exit sales and open purchases immediately in the opposite direction (expecting a movement of 20-25 points in the opposite direction from the level). Sellers will show themselves without activity near the daily maximum and strong US data. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from it.

Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the price at 1.2674 when the MACD indicator is in overbought territory. This will limit the pair's upward potential and lead to a reverse market turn downwards. Expect a decline towards the opposite level of 1.2648 and 1.2615.

GBP/USD: Simple trading tips for novice traders on May 16th (US session)

Chart Information:

Thin green line - entry price for buying the trading instrument.

Thick green line - presumed price where you can set Take Profit or manually take profits, as further growth above this level is unlikely.

Thin red line - entry price for selling the trading instrument.

Thick red line - presumed price where you can set Take Profit or manually take profits, as further decline below this level is unlikely.

MACD indicator. When entering the market, it is important to consider overbought and oversold zones.

Important. Beginner traders in the forex market should be cautious when deciding to enter the market. It is best to stay out of the market before important fundamental reports are released to avoid being caught in sharp exchange rate fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. You can quickly lose your deposit without placing stop orders, especially if you do not use money management and trade with large volumes.

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

Analyst InstaForex
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