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16.05.2024 09:22 AM
GBP/USD: trading tips for beginners for European session on May 16
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Overview of trading and tips on GBP/USD

The price test of 1.2627 occurred at a time when the MACD indicator was just starting to move up from the zero mark, which confirmed the entry point to buy the pound. As a result, the GBP/USD pair rose to the area of the target level at 1.2680, so traders could earn approximately 50 pips of profit. The absence of UK data helped the pound maintain its leading position, and news of cooling US inflation prompted new long positions to continue the upward trend. Unfortunately, the UK will not release any reports today, so market participants will likely bet on further GBP/USD growth, aiming for new monthly highs and will continue to work on the bullish market. As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and 2.

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Buy signals

Scenario No. 1. I plan to buy the pound today when GBP/USD reaches the entry point at 1.2699 plotted by the green line on the chart, aiming for growth to 1.2743 plotted by the thicker green line on the chart. In the area of 1.2743, I'm going to close long positions and open short ones in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). You can count on the pound's growth today within the framework of the upward trend, with the purpose of updating the monthly high. Before buying, make sure that the MACD indicator is above the zero mark and is just starting to rise from it.

Scenario No. 2. I also plan to buy the pound today in case of two consecutive tests of the price of 1.2670 at the time when the MACD indicator is in the oversold area. This will limit the downward potential of the instrument and lead to an upward reversal of the market. We can expect growth to the opposite levels of 1.2699 and 1.2743.

Sell signals

Scenario No. 1. I plan to sell the pound today after testing the level of 1.2670 (the red line on the chart), which will lead to a rapid decline in GBP/USD. The key target for sellers will be 1.2633, where I am going to close short positions and also open long positions in the opposite direction (expecting a movement of 20-25 pips in the upward direction from that level). You can sell the pound after the pair fails to consolidate near the local high, counting on a small bearish reversal. Before selling, make sure that the MACD indicator is below the zero mark and is just starting to decline from it.

Scenario No. 2: I also plan to sell the pound today in case of two consecutive tests of 1.2699 at the time when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal of the market. We can expect a decline to the opposite level of 1.2670 and 1.2633.

This image is no longer relevant

What's on the chart:

The thin green line is the entry price at which you can buy the trading instrument.

The thick green line is the price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely.

The thin red line is the entry price at which you can sell the trading instrument.

The thick red line is the price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely.

MACD line: it is important to be guided by overbought and oversold areas when entering the market

Important: Novice traders in the cryptocurrency market need to be very cautious when making decisions to enter the market. It is best to stay out of the market before important fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade with large volumes.

Remember, for successful trading, it is necessary to have a clear trading plan, similar to the one I presented above. Spontaneously making trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.

Jakub Novak,
Analytical expert of InstaForex
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