Trade Analysis and Tips for Trading the British Pound
The price test at 1.2514 in the first half of the day occurred when the MACD indicator was beginning to move upwards from the zero mark, confirming the correct entry point for buying the pound. As a result, the pair rose by 25 points. The lack of statistics understandably helped the pound, but now much depends on the reaction to the US data. Figures on the personal consumption expenditure index, the preferred inflation indicator for the Fed, changes in expenditure and income levels, as well as data on the consumer sentiment index and inflation expectations from the University of Michigan, are expected. Good statistics will push the pound off its weekly maximum, dragging it down properly by the end of the day. Poor statistics – why not a reason to buy GBP/USD? As for the intraday strategy, I will rely more on scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today when the entry point reaches around 1.2525 (green line on the chart) with the aim of rising to the level of 1.2563 (thicker green line on the chart). At 1.2563, I will exit purchases and open sales in the opposite direction (counting on a movement of 30-35 pips in the opposite direction from the level). Pound growth today can be expected only after weak US data as part of an upward correction. Important! Before buying, make sure that the MACD indicator is above the zero mark and only starting to rise from it.
Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the price at 1.2501, at a time when the MACD indicator is in the overbought zone. This will limit the pair's downward potential and lead to a reversal of the market upwards. Expect growth to opposite levels of 1.2525 and 1.2563.
Sell Signal
Scenario #1: I plan to sell the pound today after updating the level of 1.2501 (red line on the chart), which will lead to a rapid decline in the pair. The key goal for sellers will be the level of 1.2464, where I will exit sales and immediately open purchases in the opposite direction (counting on a movement of 20-25 pips in the opposite direction from the level). Sellers will show themselves in case of strong US reports. Important! Before selling, make sure that the MACD indicator is below the zero mark and only starting to decline from it.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the price at 1.2525, at a time when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a reversal of the market downwards. Expect a decrease to opposite levels of 1.2501 and 1.2464.
What's on the chart:
Thin green line – entry price for buying the trading instrument;
Thick green line – anticipated price where you can set Take Profit or manually take profit, as further growth above this level is unlikely;
Thin red line – entry price for selling the trading instrument;
Thick red line – anticipated price where you can set Take Profit or manually take profit, as further decline below this level is unlikely;
MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.
Important. Beginner traders in the Forex market need to be very cautious when making entry decisions. Before important fundamental reports are released, it is best to stay out of the market to avoid being caught in sharp exchange rate fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. You need to set stop orders to avoid losing your entire deposit, especially if you do not use money management and trade with large volumes.
And remember, successful trading requires a clear trading plan similar to the one I presented above. Spontaneous trading decisions based on the current market situation are initially a losing strategy for intraday traders.
