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20.12.202410:01 Forex Analysis & Reviews: GBP/USD: Simple Trading Tips for Beginner Traders on December 20. Forex Analysis of Yesterday's Trades

Relevancia 02:00 2024-12-21 UTC--5

Analysis of Trades and Trading Tips for the British Pound

The 1.2635 price test occurred when the MACD indicator had just begun moving downward from the zero level. This confirmed a correct entry point for selling the pound, which resulted in a 30-pip decline in the pair.

Optimistic reports on U.S. GDP growth encouraged traders to continue buying the dollar, exerting intense pressure on the British pound. Despite keeping interest rates unchanged, the Bank of England faces challenges combating inflation and slowing economic growth, making the pound less attractive to traders. Amid rising uncertainty in the UK and internal economic issues, further declines in the pound remain likely.

During the European session, investors will focus on several critical indicators that could significantly influence the British economy. The Retail Sales Data (including fuel costs) will provide insight into consumer sentiment, which remains a crucial driver of economic growth. Economists expect changes in consumer behavior to be tied to recent fluctuations in energy prices. In parallel, data on Net Public Sector Borrowing will help assess the level of public debt and the country's financial stability. Rising debt may raise investor concerns and negatively impact the pound's exchange rate. If the data released today is weak, the pound will likely have no chance for growth.

As for the intraday strategy, I will primarily rely on the implementation of Scenario #1 and Scenario #2.

Exchange Rates 20.12.2024 analysis

Buy Signal

Scenario #1: Plan to buy the pound today at an entry point of around 1.2526 (green line) with a target of reaching the 1.2556 level (thicker green line on the chart). At 1.2556, I plan to exit the long positions and open sell positions in the opposite direction, aiming for a 30-35 pips movement downward from that level. A significant rise in the pound today is unlikely.

Important! Before buying, ensure the MACD indicator is above the zero level and beginning to rise.

Scenario #2: I plan to buy the pound today if the price tests the 1.2477 level twice while the MACD indicator is in the oversold area. This would limit the pair's downward potential and lead to an upward market reversal. A rise to the opposite levels of 1.2526 and 1.2556 can be expected.

Sell Signal

Scenario #1: Plan to sell the pound today after breaking below the 1.2477 level (red line on the chart), which would trigger a quick decline in the pair. The primary target for sellers would be the 1.2427 level, where I plan to exit the sell trades and immediately open buy positions in the opposite direction, aiming for a 20-25-pip rebound from that level. Selling the pound would align with the continuation of yesterday's trend.

Important! Before selling, ensure the MACD indicator is below the zero level and beginning to decline.

Scenario #2: I also plan to sell the pound today if the price tests the 1.2526 level twice while the MACD indicator is in the overbought area. This would limit the pair's upward potential and lead to a downward market reversal. A decline to the opposite levels of 1.2477 and 1.2427 can be expected.

Exchange Rates 20.12.2024 analysis

Chart Notes

  • Thin green line: Entry price for buying the trading instrument.
  • Thick green line: A suggested target for Take Profit or manually locking in profits, as further growth above this level is unlikely.
  • Thin red line: Entry price for selling the trading instrument.
  • Thick red line: A suggested target for Take Profit or manually locking in profits, as further decline below this level is unlikely.
  • MACD Indicator: Critical for identifying overbought and oversold zones to guide market entry decisions.

Important Note for Beginner Traders

  • Always approach market entry decisions cautiously.
  • Avoid trading during major news releases to sidestep volatile price swings.
  • If trading during news releases, always set stop-loss orders to minimize losses.
  • Trading without stop-loss orders or money management practices can quickly deplete your deposit, especially when using large volumes.
  • A clear trading plan, like the one outlined above, is essential for successful trading. Spontaneous trading decisions based on current market conditions are inherently disadvantageous for intraday traders.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Jakub Novak,
Analytical expert of InstaSpot
© 2007-2024
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