Analysis of Trades and Tips for Trading the British Pound
The test of the 1.2868 price occurred when the MACD indicator had already moved significantly up from the zero mark, limiting the pair's further upward potential. For this reason, I didn't buy the pound, even though the UK GDP data exceeded economists' forecasts. Today's US data limit the pound's upward potential, so all focus should shift to that. The Consumer Price Index and weekly initial jobless claims, along with the speech by FOMC member Raphael Bostic, will set the market direction. Higher-than-expected US inflation – the dollar rises, and the pound falls. Inflation falls towards the Fed's target – the dollar falls, and the pound rises again. As for the intraday strategy, I plan to act based on Scenario #1, despite the MACD indicator readings, as I expect strong directional movement following the statistics.
Buy Signal
Scenario #1: Today, I plan to buy the pound at the entry point around 1.2889 (green line on the chart) with a target of rising to 1.2940 (thicker green line). Around 1.2940, I will exit the purchases and open sales in the opposite direction, expecting a movement of 30-35 points from the level. The pound will rise today as the upward trend continues, especially with news of declining inflation. Important! Before buying, ensure the MACD indicator is above the zero mark and starting its upward movement.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.2859 price when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to a market reversal upwards. You can expect growth to the opposite levels of 1.2889 and 1.2940.
Sell Signal
Scenario #1: Today, I plan to sell the pound after it updates the level of 1.2859 (red line on the chart), leading to a quick decline in the pair. The key target for sellers will be the level of 1.2808, where I plan to exit sales and immediately open purchases in the opposite direction, expecting a movement of 20-25 points from the level. Sellers will show themselves after a failed attempt to consolidate around the daily high and news of rising inflation. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting its downward movement.
Scenario #2: I also plan to sell the pound today if two consecutive tests of the 1.2889 price are tested when the MACD indicator is overbought. This will limit the pair's upward potential and lead to a downward market reversal. You can expect a decline to the opposite levels of 1.2859 and 1.2808.
Chart Key:
- Thin green line – entry price for buying the trading instrument.
- Thick green line – anticipated price for placing Take Profit or manually fixing profits, as further growth above this level is unlikely.
- Thin red line – entry price for selling the trading instrument.
- Thick red line – anticipated price for placing Take Profit or manually fixing profits, as further decline below this level is unlikely.
- MACD Indicator – It is important to consider overbought and oversold areas when entering the market.
Important Advice for Beginner Forex Traders:
- Be very cautious when making market entry decisions. It is best to stay out of the market before releasing important fundamental reports to avoid getting caught in sharp price fluctuations.
- If you decide to trade during news releases, always set stop orders to minimize losses. You can quickly lose your entire deposit without stop orders, especially if you don't use money management and trade large volumes.
- Remember that you need a clear trading plan, like the one presented above, for successful trading. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.
