Analysis of Trades and Tips for Trading the British Pound
The test of the 1.2817 price level occurred when the MACD indicator had already moved significantly above the zero mark, limiting the pair's further upward potential. For this reason, I did not buy the pound, especially given the uncertainty ahead of important speeches by US politicians. The absence of data from the UK impacted market volatility in the first half of the day, but all attention is now on the speech by Federal Reserve Chairman Jerome Powell. Powell's hawkish stance in fighting inflation will likely lead to a drop in GBP/USD, which has been strongly anticipated recently. Hints of a pivot and a dovish stance on rates, which traders and investors have been expecting since this spring, will lead to further growth in GBP/USD according to the trend. As for the intraday strategy, I plan to act based on the implementation of scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound upon reaching the entry point around 1.2830 (green line on the chart) with the target of rising to the level of 1.2879 (thicker green line on the chart). Around 1.2879, I will exit the purchases and open sales in the opposite direction (expecting a movement of 30-35 points in the opposite direction from the level). You can expect the pound to rise today, continuing the trend, but only after Powell's dovish speech. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.
Scenario #2: Today, I also plan to buy the pound in the case of two consecutive tests of the 1.2795 price when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. Growth can be expected to be at the opposite levels of 1.2830 and 1.2879.
Sell Signal
Scenario #1: Today, I plan to sell the pound after updating the 1.2795 (red line on the chart), leading to a quick decline in the pair. The key target for sellers will be the level of 1.2744. I will exit the sales and immediately open purchases in the opposite direction (expecting a movement of 20-25 points in the opposite direction from the level). Sellers will show themselves after an unsuccessful consolidation around the daily high and a hawkish stance from the Fed. Important! Before selling, make sure the MACD indicator is below the zero mark and just starting its decline from it.
Scenario #2: Today, I also plan to sell the pound in the case of two consecutive tests of the 1.2830 price when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decline can be expected to the opposite levels of 1.2795 and 1.2744.
What's on the Chart:
- Thin green line – entry price at which you can buy the trading instrument;
- Thick green line – the assumed price where you can set Take Profit or independently fix profits, as further growth above this level is unlikely;
- Thin red line – entry price at which you can sell the trading instrument;
- Thick red line – the assumed price where you can set Take Profit or independently fix profits, as further decline below this level is unlikely;
- MACD Indicator. When entering the market, it is important to be guided by overbought and oversold zones.
Important. Beginner forex traders need to be very cautious when making market entry decisions. It is best to stay out of the market before releasing important fundamental reports to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember, for successful trading, you need to have a clear trading plan, like the one presented above. Spontaneous trading decisions based on the current market situation are initially a losing strategy for an intraday trader.
