Analysis of Trades and Trading Tips for the British Pound
The price test at 1.3317 occurred when the MACD indicator moved significantly above the zero line, limiting the pair's upward potential. For this reason, I did not buy the pound.
The pound showed little reaction to the U.S. data from the University of Michigan, continuing to trade within a sideways channel with a good chance to resume its upward movement at any convenient opportunity. It is important to note that the overall economic situation also influences investor sentiment toward the British pound in the UK. Despite low inflation and recession fears, the Bank of England is in no hurry to cut interest rates, expecting a serious spike in price pressures due to new trade tariffs from the U.S. In the coming weeks, key factors determining the pound's dynamics will be UK inflation, employment data, and the Bank of England's interest rate decisions. If inflation continues to slow and the labor market remains resilient, the BoE may proceed with policy easing, which would pressure the pound.
Today, we are unlikely to see a substantial spike in volatility; however, pound buyers can hope for good retail sales data, according to the Confederation of British Industry (CBI). Given that the short-term outlook for the British pound appears relatively favorable, strong retail sales data would meet expectations and lead to a new wave of GBP/USD growth. Nevertheless, investors should closely monitor developments and consider potential risks when making investment decisions. It is important to remember that numerous factors influence the currency market, and any forecasts should be cautiously approached.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3338 (green line on the chart) with the target of rising to 1.3375 (thicker green line on the chart). Around 1.3375, I plan to exit purchases and open sales in the opposite direction (aiming for a movement of 30–35 pips in the opposite direction from the entry point). Buying the pound today should only be considered after strong data.
Important! Before buying, ensure the MACD indicator is above the zero line and just beginning its upward movement.
Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the 1.3309 price level at a time when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to a reversal upward. A rise toward the opposite levels of 1.3338 and 1.3375 can be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after breaking below the 1.3309 level (red line on the chart), which will lead to a quick drop in the pair. The key target for sellers will be the 1.3265 level, where I plan to exit sales and immediately open purchases in the opposite direction (aiming for a 20–25 pip move in the opposite direction from the entry point). Selling the pound is advisable after weak data.
Important! Before selling, ensure the MACD indicator is below the zero line and just beginning its downward movement.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.3338 price level at a time when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a reversal downward. A decline toward the opposite levels of 1.3309 and 1.3265 can be expected.
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.
