Analysis of Trades and Trading Tips for the British Pound
The test of the 1.3352 price level occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair's upside potential. For this reason, I did not buy the pound. Selling on a rebound at 1.3404 yielded only about 15 pips of profit.
Since the Bank of England currently has no plans for further interest rate cuts, this factor supports the pound sterling and contributes to its strengthening against the U.S. dollar. The influence of geopolitics is also difficult to overestimate, and positive progress in resolving trade conflicts will continue to stimulate interest in higher-risk assets, including the British pound.
No UK data are scheduled today, so the focus will shift to a speech by Sir David Ramsden, the Bank of England's Deputy Governor for Markets and Banking. His speech could shed light on the current sentiment within the central bank regarding inflation and future monetary policy. Given the active decline in inflation, the reasons for not cutting interest rates are decreasing. Therefore, markets will be closely monitored for any hints of a change in rhetoric. Investors will look for signals regarding how seriously the central bank perceives the threat of an economic slowdown and whether it is ready to ease monetary pressure to support the economy. Attention will be paid to any comments from Ramsden regarding the prospects for further rate cuts.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound upon reaching the entry point around 1.3424 (green line on the chart), with a target of rising toward 1.3486 (thicker green line). Near 1.3486, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip movement in the opposite direction from the level). Betting on the pound's growth today is reasonable only after a cautious stance from Ramsden.
Important! Before buying, make sure the MACD indicator is above the zero line and just beginning to rise.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.3383 price level while the MACD indicator is in the oversold zone. This would limit the pair's downside potential and lead to an upward reversal. A rise toward the opposite levels of 1.3424 and 1.3486 can be expected.
Sell Signal
Scenario #1: Today, I plan to sell the pound after a breakout below the 1.3383 level (red line on the chart), which should lead to a quick decline in the pair. The key target for sellers will be the 1.3334 level, where I plan to exit short positions and immediately open long positions (expecting a 20–25 pip movement in the opposite direction from the level). Selling the pound is advisable after a dovish rhetoric.
Important! Before selling, ensure the MACD indicator is below the zero line and starting to decline.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.3424 price level while the MACD indicator is in the overbought zone. This would limit the pair's upside potential and lead to a downward market reversal. A decline toward the opposite levels of 1.3383 and 1.3334 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.
