FX.co ★ GBP/USD: Simple trading tips for beginner traders on May 31st (American Session)

The first test of the price at 1.2365 occurred when the MACD had already moved down significantly from the zero mark, limiting the downside potential of the pair. For this reason, I did not sell the pound and decided to wait for the implementation of scenario #2 before buying. After a short period, the pair tested 1.2365 again, and at that moment, the MACD was already recovering from the oversold area, which seemed like a good signal to buy the pound. Unfortunately, the upward movement did not materialize.

In the second half of the day, speeches by FOMC members Bowman and Harker are expected, which can significantly influence the market direction. Any statements regarding interest rates and policymakers' assessment of the situation in June of this year can only intensify pressure on the pound, leading to further decline in GBP/USD and the renewal of monthly lows. Positive figures for the Chicago Purchasing Managers' Index (PMI) will only strengthen sellers' confidence in their actions. Therefore, I will stick to implementing scenario #1.

Buy signal:

Scenario #1: Buying the pound today can be done when the entry point is reached around 1.2376 (green line on the chart) with a target of growth towards 1.2415 (thicker green line on the chart). Around 1.2415, I recommend exiting the purchases and opening sales in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). The pound's growth can only occur in the case of very weak US data and bear profit-taking at the end of the month. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.

Scenario #2: Buying the pound today is also possible in the case of two consecutive price tests at 1.2352 when the MACD indicator is in the oversold area. This will limit the downside potential of the pair and lead to a reverse market turn upwards. One can expect an increase towards the opposite levels of 1.2376 and 1.2415.

Sell signal:

Scenario #1: Selling the pound today is only possible after the level of 1.2352 is updated (red line on the chart), leading to a rapid decline in the pair. The key target for sellers will be the level of 1.2322. I recommend exiting the sales and opening immediate purchases in the opposite direction (expecting a movement of 20-25 pips in the opposite direction from the level). The pound's decline will continue with hawkish statements from Federal Reserve policymakers. Important! Before selling, make sure that the MACD indicator is below the zero mark and just starting to decline.

Scenario #2: Selling the pound today is also possible in the case of two consecutive price tests at 1.2376 when the MACD indicator is in the overbought area. This will limit the upside potential of the pair and lead to a reverse market turn downwards. One can expect a decline towards the opposite levels of 1.2352 and 1.2322.

What's on the chart:

Thin green line - entry price at which you can buy the trading instrument.

Thick green line - the estimated price where you can set take profit or independently fix profits, as further growth above this level is unlikely.

Thin red line - entry price at which you can sell the trading instrument.

Thick red line - the estimated price where you can set take profit or independently fix 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 must be very cautious when deciding to enter the market. It is best to stay out of the market before important fundamental reports to avoid getting 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 don't use money management and trade with large volumes.

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