Review of Trades and Tips for Trading the British Pound
The test of the 1.2881 price level occurred when the MACD indicator had just started to move down from the zero mark, which was a good confirmation for entering a sell position on the pound. However, there was a caveat: the strong PMI data from the UK. So, I decided not to sell and waited for more suitable market entry options. In the second half of the day, we expect a lot of interesting statistics related to the US economy. Anticipated data include the manufacturing PMI, services PMI, and composite PMI for July this year. Good data will be a reason to buy more dollars and sell pounds. Regarding the intraday strategy, I plan to act based on scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound upon reaching the entry point around 1.2922 (green line on the chart) with the target of rising to the level of 1.2945 (thicker green line on the chart). At 1.2945, I will exit purchases and open sales in the opposite direction, aiming for a movement of 30-35 points in the opposite direction from the level. The pound's growth today can be expected after weak US data. Important: Before buying, ensure that the MACD indicator is above the zero mark and just starting its growth from it.
Scenario #2: I also plan to buy the pound today if the price tests 1.2898 twice consecutively 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 to the opposite levels of 1.2922 and 1.2945 can be expected.
Sell Signal
Scenario #1: I will sell the pound today after the level of 1.2898 (red line on the chart) is updated, leading to a quick decline of the pair. The key target for sellers will be the 1.2856 level, where I plan to exit sales and immediately open purchases in the opposite direction (aiming for a movement of 20-25 points in the opposite direction from the level). Sellers will show their presence after a good correction and strong data. Important: Before selling, ensure that the MACD indicator is below the zero mark and just starting its decline from it.
Scenario #2: I also plan to sell the pound today if the price tests 1.2922 twice consecutively 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 to the opposite levels of 1.2898 and 1.2865 can be expected.
Chart Details:
- Thin Green Line: Entry price for buying the trading instrument.
- Thick Green Line: Presumed price for setting Take Profit or manually taking profits, as further growth above this level is unlikely.
- Thin Red Line: Entry price for selling the trading instrument.
- Thick Red Line: Presumed price for setting Take Profit or manually taking 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 areas.
Important: Beginner forex traders should be cautious when making market entry decisions. It is best to stay out of the market before the release of important fundamental reports to avoid sharp rate fluctuations. If you decide to trade during news releases, always place 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.
Remember, for successful trading, you need 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.
