Analysis of transactions and tips for trading the British pound
On Friday, there were several signals for the pound to enter the market, but they did not fall under the right conditions. The 1.1795 price test occurred when the MACD was far from the zero mark, limiting the pair's downward potential. A similar situation occurred at the time of the 1.1824 update, where the MACD went up quite a lot, and buying on the current signal was quite risky – especially before the speech of the Chairman of the Federal Reserve System.
The speech of the Chairman of the Fed Board of Governors, Jerome Powell, led to a sharp rise in the US dollar and a new fall in the British pound. The demand for the dollar will continue to remain at a fairly high level, so it is best to continue selling the GBPUSD pair. Today in the first half of the day, no fundamental statistics could change the pound's direction, so in case of growth, I advise you to look closely at the implementation of scenario No. 2 for sale further along the trend. There are also no important fundamental statistics in the afternoon, and the speech of FOMC member Lael Brainard, who advocates further aggressive interest rate hikes, will surely lead to a new wave of decline in the GBP/USD pair.
Buy Signal
Scenario #1: you can buy the pound today when you reach the entry point in the area of 1.1678 (green line on the chart) to grow to the level of 1.1716 (thicker green line on the chart). In the area of 1.1716, I recommend exiting purchases and opening sales in the opposite direction (counting on a movement of 30-35 points in the opposite direction from the level). It is unlikely to count on strong pound growth, especially after Powell's statements on Friday. Important! Before buying, make sure that the MACD indicator is above the zero mark and is just beginning its growth from it.
Scenario #2: it is also possible to buy the pound today if the price reaches 1.1653, but at this moment, the MACD indicator should be in the oversold area, which will limit the downward potential of the pair and lead to an upward reversal of the market. We can expect growth to the opposite levels of 1.1678 and 1.1716.
Sell Signal
Scenario #1: it is possible to sell the pound today only after updating the level of 1.1653 (the red line on the chart), which will lead to a rapid decline of the pair. The key goal of sellers will be the 1.1614 level, where I recommend exiting sales and immediately opening purchases in the opposite direction (counting on a movement of 20-25 points in the opposite direction from the level). The pressure on the pound will return in case of unsuccessful growth above 1.1680. Before selling, make sure that the MACD indicator is below the zero mark and is just beginning its decline from it.
Scenario #2: it is also possible to sell the pound today if the price reaches 1.1678, but at this moment, the MACD indicator should be in the overbought area, which will limit the upward potential of the pair and lead to a reverse market reversal down. We can expect a decline to the opposite levels of 1.1653 and 1.1614.
What's on the chart:
The thin green line is the entry price at which you can buy a trading instrument;
The thick green line is the estimated price where you can place Take profit or fix profits yourself since further growth is unlikely above this level;
The thin red line is the entry price at which a trading instrument can be sold;
The thick red line is the estimated price where you can place Take profit or fix profits yourself since the further decline is unlikely below this level;
The MACD indicator. When entering the market, it is important to be guided by overbought and oversold zones.
Important. Novice traders in the Forex market must make very careful decisions on entering the market. Before releasing important fundamental reports, it is best to stay out of the market to avoid falling into sharp fluctuations in the exchange rate. Always place stop orders to minimize losses if you decide to trade during the news release. You can lose the entire deposit quickly without placing stop orders, especially if you do not use money management but trade in large volumes.
And remember that for successful trading, it is necessary to have a clear trading plan, following the example of the one I presented above. Spontaneous trading decisions based on the current market situation are initially a losing strategy of an intraday trader.
