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GBP/USD: Simple trading tips for novice traders on May 22nd (US session)
May 23, 2024 5:07 pmVideo
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Analysis of trades and tips for trading the British pound
GBP buyers took a risk but failed to maintain control of the market. The test of the 1.2740 price level occurred when the MACD indicator was just starting to move down from the zero mark, confirming the correct entry point for selling the pound after a sharp upward jump and an unsuccessful consolidation near the monthly high. As a result, the pair quickly fell to the target level of 1.2703. Inflation data from the UK was interpreted differently: some saw good economic prospects, but currency traders were likely disappointed by the Bank of England’s dovishness, which could weaken the pound’s position against a hawkish Fed stance. After publishing the minutes from the US central bank’s meeting, we will learn about this stance in the afternoon. Remember the US existing home sales data, which could also cause volatility spikes. I plan to act based on implementing Scenarios 1 and 2 for the intraday strategy.
Scenario 1: I plan to sell the pound today after updating the 1.2695 level (red line on the chart), leading to a quick decline in the pair. The key target for sellers will be the 1.2665 level, where I will exit the sell trades and immediately open buy trades in the opposite direction (expecting a movement of 20–25 points in the opposite direction from the level). Sellers will assert themselves in the case of good data and hawkish Fed minutes. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to fall from it.
Scenario 2: I also plan to sell the pound today in case of two consecutive tests of the 1.2727 price level when the MACD indicator is in the overbought area. This will limit the pair’s upward potential and lead to a market reversal downward. A decline to the opposite levels of 1.2695 and 1.2665 can be expected.
What’s on the Chart:
Important Notes
Beginner forex traders should make entry decisions very cautiously. It is best to stay out of the market before major fundamental reports are released to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
Remember, for successful trading, you need a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.
The material has been provided by InstaForex Company – www.instaforex.com
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