Analysis of Trades and Tips for Trading the British Pound
The test of 1.3237 occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair's further upward potential. For this reason, I didn't risk entering the market, especially after the major Asian sell-off of the pound. Aside from the Bank of England meeting, attention should also be given to U.S. data. The number of initial jobless claims and existing home sales figures will take priority, while the manufacturing index from the Philadelphia Fed and the current account balance can likely be ignored. Keep in mind that a dovish stance from the Bank of England may weigh on the pound, increasing pressure on the pair. For intraday strategy, I plan to follow scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound at the entry point around 1.3308 (green line on the chart) with a target of 1.3371 (thicker green line on the chart). Around 1.3371, I will exit the buy position and open a sell position in the opposite direction, aiming for a 30-35 point movement from the entry point. The pound is likely to rise today following a cautious stance by the Bank of England.Note: Before buying, ensure the MACD indicator is above the zero line and just starting to rise.
Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the 1.3243 price level when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a reversal back up. A rise towards the opposite levels of 1.3308 and 1.3371 can be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after breaking below the 1.3243 level (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be 1.3186, where I will exit the sell and immediately open a buy in the opposite direction (targeting a 20-25 point movement in the opposite direction from the level). Sellers are expected to react in the event of a dovish stance from the Bank of England.Note: Before selling, ensure the MACD indicator is below the zero line and has just started to decline.
Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the 1.3308 price level when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a reversal back down. A decline towards the opposite levels of 1.3243 and 1.3186 can be expected.
Chart Key:
- Thin green line – the entry price for buying the trading instrument.
- Thick green line – the suggested price where you can place a Take Profit or manually secure profits, as further growth above this level is unlikely.
- Thin red line – the entry price for selling the trading instrument.
- Thick red line – the suggested price where you can place a Take Profit or manually secure profits, as further decline below this level is unlikely.
- MACD Indicator – When entering the market, it is important to consider overbought and oversold zones.
Important:
Beginner forex traders should be very cautious when making entry decisions. It is best to stay out of the market before important fundamental reports to avoid sharp price 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 are trading large volumes without proper money management.
Remember, successful trading requires a clear trading plan, like the one presented above. Spontaneous trading decisions based on the current market situation are typically unprofitable for intraday traders.
