Analysis of Trades and Tips for Trading the British Pound
The test of the 1.2828 price level occurred when the MACD indicator had moved significantly below the zero mark, limiting the pound's further downside potential—especially before the important U.S. statistics expected in the second half of the day. In addition to the ADP employment change data, the FOMC's decision on the main interest rate, the accompanying FOMC statement, and a press conference where the Fed chair will personally explain how the regulator will proceed with interest rates and when they plan to declare complete victory over inflation, are all expected. The Fed will likely save such announcements closer to the U.S. elections in November this year. For the intraday strategy, I plan to act based on Scenario No. 1, despite the MACD indicator readings, as I expect strong and directional movements.
Buy Signal
Scenario No. 1: Today, I plan to buy the pound when the entry point reaches around 1.2845 (green line) to rise to the 1.2880 level (thicker green line on the chart). At 1.2880, I will exit purchases and open sales in the opposite direction, aiming for a 30-35 point move from the level. Today's rise in the pound can be expected only after a dovish stance from the Fed. Note: Before buying, ensure the MACD indicator is above the zero mark and just beginning to rise.
Scenario No. 2: Today, I also plan to buy the pound in case of two consecutive tests of the 1.2828 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. A rise to the opposite levels of 1.2845 and 1.2880 can be expected.
Sell Signal
Scenario No. 1: Today, I plan to sell the pound after the 1.2828 level is updated (red line on the chart), leading to a quick decline in the pair. The key target for sellers will be the 1.2802 level, where I will exit sales and immediately open purchases in the opposite direction, aiming for a 20-25 point move from the level. Sellers will manifest only after strong U.S. data and a hawkish stance from the Fed. Note: Before selling, ensure the MACD indicator is below the zero mark and starting to fall from it.
Scenario No. 2: Today, I plan to sell the pound in case of two consecutive tests of the 1.2845 price when the MACD indicator is overbought. This will limit the pair's upward potential and lead to a market reversal downwards. A decline to the opposite levels of 1.2828 and 1.2802 can be expected.
Chart Explanation:
- Thin green line: Entry price for buying the trading instrument.
- Thick green line: The anticipated price where you can set Take Profit or independently fix profit, as further growth above this level is unlikely.
- Thin red line: Entry price for selling the trading instrument.
- Thick red line: The anticipated price where you can set Take Profit or independently fix profit, as further decline below this level is unlikely.
- MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.
Note: Beginner traders on the Forex market need to make market entry decisions very carefully. It is best to stay out of the market before important fundamental reports to avoid sharp exchange rate 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 in large volumes.
Keep in mind that successful trading requires a clear plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is initially a losing strategy for an intraday trader.
