06.05.202508:48 Forex Analysis & Reviews: GBP/USD: Simple Trading Tips for Beginner Traders on May 6. Review of Yesterday's Forex Trades

Analysis of Trades and Trading Tips for the British Pound

The test of the 1.3308 level in the second half of the day occurred just as the MACD indicator began to move downward from the zero line, confirming a valid entry point for selling the pound and resulting in a decline of over 30 pips in the pair.

Today, we expect important data on the UK Services Purchasing Managers' Index (PMI) and the composite index. If the figures are revised upward, demand for the pound will likely return. Otherwise, another drop in the pair will be hard to avoid. Investors and analysts are watching these indicators closely, as they offer insight into the current state of the British economy. The services PMI is especially critical, since the services sector accounts for a significant portion of the UK's GDP. An upward revision of the PMI may suggest that the economy is recovering and services firms are seeing increased activity. This can lead to greater demand for the pound as investors gain confidence in the UK's economic outlook. On the other hand, a drop in the PMI could signal a slowdown or even recession. Investors may start dumping the pound in that case, leading to further depreciation.

For intraday strategy, I will focus primarily on Scenarios #1 and #2.

Buy Scenario

Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3308 (green line on the chart) with a target of 1.3341 (thicker green line on the chart). Around 1.3341, I plan to exit long positions and open short trades in the opposite direction, aiming for a 30–35 pip reversal from the level. A strong rally in the pound should only be expected following strong data. Important: Before entering a long position, ensure the MACD indicator is above the zero line and beginning to rise.

Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the 1.3284 level when the MACD indicator is in oversold territory. This will limit the pair's downside potential and may trigger an upward reversal. A rise to the opposing levels of 1.3308 and 1.3341 can be expected.

Sell Scenario

Scenario #1: I plan to sell the pound today after a break below the 1.3284 level (red line on the chart), which should lead to a sharp decline in the pair. The key target for sellers will be 1.3256, where I plan to exit shorts and immediately enter long positions in the opposite direction, aiming for a 20–25 pip reversal from the level. Selling the pound will be appropriate after a failed attempt to consolidate near yesterday's high and weak economic data. Important: Before entering a short position, ensure the MACD indicator is below the zero line and beginning to decline.

Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the 1.3308 level while the MACD indicator is in overbought territory. This will limit the pair's upside potential and may trigger a reversal downward. A decline to the opposing levels of 1.3284 and 1.3256 is likely.

What's on the Chart:

• The thin green line represents the entry price where the trading instrument can be bought.
• The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
• The thin red line represents the entry price where the trading instrument can be sold.
• The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
• The MACD indicator should be used to assess overbought and oversold zones when entering the market.

Important Notes:

• Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
• Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.