GBP/USD trading tips for beginners on October 31, 2022. Overview of Friday's trades

GBP analysis and trading tips

The price tested 1.1527 at the moment when the MACD indicator slipped below the zero level, thus limiting the upside potential of the pair. That is why I decided to keep the pound and waited for the buy signal. Shortly, the pair retested the level of 1.1527 where the MACD indicator had already recovered from the oversold status. As a result, the pound developed an upside movement that failed to gain momentum. Therefore, I had to close my trade with a loss. Another buy signal emerged in the second half of the day when the price tested the area of 1.1564 and the MACD indicator moved to the upside from the zero level. This resulted in a rise of 20 pips.

Today, the UK will publish some macroeconomic data that is not of big importance to traders. This includes the report on M4 money supply, mortgage approvals, and net lending to individuals. Therefore, I recommend trading within the channel in hope of the breakout of its upper boundary. In the afternoon, nothing is likely to spur volatility in the market, so it may turn flat. The Chicago PMI data that is due later in the day is unlikely to influence the market sentiment.

Buy signals

Scenario №1: it is possible to buy the pound today when the price hits the entry point of 1.1609 (a green line on the chart) with the upward target at 1.1658 (a thicker green line on the chart). I recommend closing buy positions at the level of 1.1658 and going short in the opposite direction, considering a retracement of 30-35 pips from this level. The pound may develop further growth following the existing uptrend. Note! Before going long, make sure that the MACD is located above the zero mark or has just started to rise from it.

Scenario №2: you can also buy the pound when the price reaches the level of 1.1581 but make sure that the MACD is holding in the oversold area. This will limit the downside potential of the pair and cause a bullish reversal in the trend. In this case, the quote may rise to the levels of 1.1609 and 1.1658.

Sell signals

Scenario №1: it is possible to sell the pound today after a retest of the 1.1581 level (a red line on the chart) which may lead to a rapid decline in the pair. The key downward target for sellers will become the level of 1.1528 where I recommend closing sell positions and going long in the opposite direction, considering a retracement of 30-35 pips from this level. The pound will come under pressure only if the UK data turns out to be weak. Note! Before going short, make sure that the MACD is located below the zero level or has just started to decline from it.

Scenario №2: you can also sell the pound when the price hits the 1.1609 level but make sure that the MACD is holding in the overbought area. This will limit the upside potential of the price and lead to the downward reversal of the trend. In this case, the quote may move lower to the levels of 1.1581 and 1.1528.

On the chart:

The thin green line indicates the entry point for buying the instrument;

The thick green line indicates the estimated level for setting a Take Profit or closing trades manually as the pair is unlikely to move above this line;

The thin red line indicates the entry point for selling the instrument;

The thick red line indicates the estimated level for setting a Take Profit or closing trades manually as the pair is unlikely to move below this line;

When entering the market, it is essential to consider whether the MACD is located in the oversold or overbought area.

Important! Beginners on Forex should be very careful when making a decision to enter the market. It is recommended to stay out of the market ahead of important news releases to avoid sharp fluctuations of the price. If you decide to trade on the news, make sure you set stop-loss orders to minimize losses. Without setting a Stop Loss, you risk losing your entire deposit in no time, especially if you don't use money management and trade with large volumes.

Remember that you need to have a well-developed trading plan similar to the one above to be successful in trading. Spontaneous decision-making based on the current situation is a losing strategy for an intraday trader.