Analysis of Trades and Tips for Trading the British Pound
The test of the 1.3062 price level occurred as the MACD indicator began moving up from the zero mark, confirming a good entry point for buying the pound, leading to a modest rise of 15 points. The UK data was ignored immediately after its release, with few buyers for the pound following yesterday's sell-off. In the second half of the day, we expect the U.S. Producer Price Index (PPI) figures, the University of Michigan Consumer Sentiment Index, and inflation expectations. FOMC members Austan Goolsbee and Michelle Bowman will also speak. It is unlikely that these events will support the pound, so I am not expecting a strong rise at the end of the week. Regarding intraday strategy, I plan to proceed based on scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound if the entry point around 1.3075 (green line on the chart) is reached, with a target of rising to 1.3105 (thicker green line on the chart). Around 1.3105, I plan to exit my buys and open sell positions in the opposite direction, with an anticipated movement of 30-35 points in the opposite direction. A rise in the pound today can only be expected following a decrease in U.S. inflation. Note: Before buying, ensure that the MACD indicator is above the zero mark and is just starting to rise from it.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.3050 price level when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal upwards. A rise towards the resistance levels of 1.3075 and 1.3105 can be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after breaking below the 1.3050 level (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be the 1.3023 level, where I plan to exit my sell positions. I will then open buy positions in the opposite direction, expecting a movement of 20-25 points. Sellers are likely to emerge if inflation increases sharply. Note: Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from it.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.3075 price level when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal in the market. A decline towards the support levels of 1.3050 and 1.3023 can be expected.
What's on the Chart:
- Thin green line – the entry price for buying the trading instrument.
- Thick green line – the suggested price where you can place Take Profit or manually close positions, as further growth beyond 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 Take Profit or manually close positions, 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 exercise caution when making market entry decisions. It is best to stay out of the market before important fundamental reports are released to avoid being caught in sudden price swings. If you choose to trade during news releases, always set stop-loss orders to minimize losses. Without stop-loss orders, you can quickly lose your entire deposit, especially if you do not practice money management and trade large volumes.
Remember, successful trading requires a clear trading plan, like the example provided above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.
