Trade analysis and tips for trading the British pound
The test of the price at 1.2545 occurred at a time when the MACD indicator had fallen significantly from the zero mark, limiting further downward potential. Even though the pound dipped, and I missed this movement, I could take advantage of buying on the rebound from 1.2519, which I also noted. I managed to pull out of the market with more than 30 points. The released UK labor market data turned out to be quite reasonable, so it was surprising to see the pound fall shortly after that, which was quickly bought up, as there were no reasons to increase short positions. In the second half of the day, volatility may spike again as US Producer Price Index data is expected to be released, along with a speech by Federal Reserve Chairman Jerome Powell. A tough stance and hints of further combat against high inflation will quickly bring demand back to the dollar, whereas a softer stance and chances of rate cuts this year will lead to continued upward momentum for the pair. As for the intraday strategy, I plan to act based on the realization of scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound when the entry point reaches around 1.2568 (green line) to rise to 1.2599 (thicker green line on the chart). At around 1.2599, I will exit the purchases and open sales in the opposite direction (anticipating a movement of 30-35 points in the opposite direction from the level). A rise in the pound today can only be expected after weak US statistics. Important! Before buying, ensure that the MACD indicator is above the zero mark and only starting to rise.
Scenario #2: Today, I also plan to buy the pound in case of two consecutive tests of the price at 1.2543 at a time when the MACD indicator is in oversold territory. This will limit the downward potential of the pair and lead to a reversal of the market upward. Expect growth to levels 1.2568 and 1.2599.
Sell Signal
Scenario #1: I plan to sell the pound today after the level of 1.2543 is updated (red line on the chart), leading to a rapid decline in the pair. The key target for sellers will be the level of 1.2514, where I will exit sales and immediately open purchases in the opposite direction (anticipating a movement of 20-25 points in the opposite direction from the level). Sellers will show themselves in case of inactivity around the daily maximum and a hawkish stance by Jerome Powell. Important! Before selling, ensure that the MACD indicator is below the zero mark and is only starting to decline from it.
Scenario #2: Today, I also plan to sell the pound in case of two consecutive tests of the price at 1.2568 at a time when the MACD indicator is in overbought territory. This will limit the upward potential of the pair and lead to a reversal of the market downward. Expect a decline to the opposite levels of 1.2543 and 1.2514.
What's on the Chart:
Thin green line - entry price, at which the trading instrument can be bought.
Thick green line - the assumed price where you can set Take Profit or fix profits independently, as further growth above this level is unlikely.
Thin red line - entry price at which the trading instrument can be sold.
Thick red line - the assumed price where you can set Take Profit or fix profits independently, as further decline below this level is unlikely.
MACD indicator. When entering the market, following the overbought and oversold zones is important.
Important. Beginner traders in the forex market must be cautious when making entry decisions. Before important fundamental reports are released, staying out of the market is best to avoid getting caught in sharp exchange rate fluctuations. If you decide to trade during news releases, always set 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 that for successful trading, you need a clear trading plan, like the one presented above. Spontaneous decision-making based on the current market situation is inherently a losing strategy for an intraday trader.
