Analysis of Trades and Tips for Trading the British Pound
The levels I outlined earlier did not get tested in the first half of the day. After the sharp rise in the pound driven by strong UK statistics, volatility decreased as major buyers left the market, leading to a lack of direction. In the second half of the day, everything will depend on the US data on building permits and the speeches by FOMC members Raphael Bostic and Neel Kashkari. Dovish comments from policymakers could support the pound's further upward correction. Otherwise, the pair may finish the trading day within a sideways channel. As for 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 1.3051 (green line on the chart), aiming for a rise towards 1.3076 (thicker green line on the chart). At 1.3076, I will exit purchases and open sales in the opposite direction (anticipating a movement of 30-35 points in the opposite direction). A rise in the pound today will depend on weak US data. Note: Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise from it.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.3032 level when the MACD indicator is in oversold territory. This will limit the pair's downward potential and lead to an upward market reversal. A rise can be expected towards the target levels of 1.3051 and 1.3076.
Sell Signal
Scenario #1: I plan to sell the pound today upon breaking the 1.3032 level (red line on the chart), leading to a rapid decline in the pair. The key target for sellers will be 1.3011, where I will exit my sales and consider buying in the opposite direction (anticipating a movement of 20-25 points in the opposite direction). Sellers are likely to become more active if the pair fails to hold above 1.3051. Note: 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 there are two consecutive tests of the 1.3051 level when the MACD indicator is in overbought territory. This will cap the pair's upward momentum and lead to a downward market reversal. A decline can be expected towards the support levels of 1.3032 and 1.3011.
Chart Overview:
- Thin green line – Entry price where the trading instrument can be bought.
- Thick green line – Target price where you can place Take Profit or manually lock in profits, as further growth above this level is unlikely.
- Thin red line – Entry price where the trading instrument can be sold.
- Thick red line – Target price where you can place Take Profit or manually lock in profits, as further decline below this level is unlikely.
- MACD Indicator: It is crucial to consider overbought and oversold zones when entering the market.
Important: Beginner traders in the Forex market must be very cautious when making decisions about market entry. It is best to stay out of the market before significant fundamental reports are released. This helps avoid sudden price swings. If you decide to trade during news releases, always place stop orders to minimize potential losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember, successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based on the current market situation is initially a losing strategy for an intraday trader.
