Analysis of Trades and Tips for Trading the British Pound
The test of the 1.2728 level coincided with the MACD indicator just starting to rise from the zero mark, confirming a valid entry point for buying the pound, which resulted in the pair rising to the target level of 1.2765. However, sales on the rebound from this level, as per Scenario #2, did not meet expectations.
The speech by the Bank of England's Deputy Governor, Sir David Ramsden, will undoubtedly attract the attention of forex market participants, especially given the current economic conditions. His comments on future regulatory policy will signal how the Bank of England plans to respond to changing economic circumstances.
If Ramsden outlines specific measures or policy changes, this could significantly impact the pound's exchange rate. Expectations of a hawkish monetary policy may strengthen GBP/USD, while hints at easing could trigger a decline. Should Ramsden's speech be optimistic and backed by concrete plans for rate hikes, traders might increase buying activity. Conversely, a cautious or vague speech could raise investor concerns, potentially leading to a drop in the pound. Overall, I anticipate range-bound trading, as nothing groundbreaking is expected ahead of the Bank of England meeting.
For intraday strategies, I will focus on implementing Scenarios #1 and #2.
Buy Signal
Scenario #1:Plan to buy the pound at the entry point near 1.2784 (green line on the chart) with a target of 1.2810 (thicker green line on the chart). At 1.2810, I plan to exit buy trades and open sales in the opposite direction, expecting a 30–35 point downward movement from the level. A pound rally today is likely only if Ramsden takes a highly hawkish stance.Important: Before buying, ensure the MACD indicator is above the zero mark and just starting to rise.
Scenario #2:I also plan to buy the pound in case of two consecutive tests of the 1.2765 level when the MACD indicator is in the oversold area. This would limit the pair's downward potential and lead to an upward reversal. Growth can be expected toward the 1.2784 and 1.2810 levels.
Sell Signal
Scenario #1:Plan to sell the pound after breaking below the 1.2765 level (red line on the chart), which should lead to a quick decline in the pair. The key target for sellers will be 1.2740, where I will exit sales and immediately open buy trades in the opposite direction, expecting a 20–25 point upward movement from the level. Sellers will likely assert themselves only if there is no buyer activity near the daily high.Important: Before selling, ensure the MACD indicator is below the zero mark and just starting to decline.
Scenario #2:I also plan to sell the pound in case of two consecutive tests of the 1.2784 level when the MACD indicator is in the overbought area. This would limit the pair's upward potential and lead to a downward reversal. A decline can be expected toward the 1.2765 and 1.2740 levels.
Chart Notes
- Thin Green Line: Entry price for buying the instrument.
- Thick Green Line: Target price for Take Profit or manually fixing profits, as further growth above this level is unlikely.
- Thin Red Line: Entry price for selling the instrument.
- Thick Red Line: Target price for Take Profit or manually fixing profits, as further declines below this level are unlikely.
- MACD Indicator: Consider overbought and oversold areas when entering the market.
Important Advice for Beginner Forex Traders:
- Exercise caution when making market entry decisions.
- Avoid trading before major fundamental reports to prevent getting caught in sharp price fluctuations.
- If you decide to trade during news releases, always set stop-loss orders to minimize losses. Without stop-losses, you risk quickly losing your entire deposit, especially when trading large volumes without proper money management.
- Always have a clear trading plan, like the one outlined above. Spontaneous trading decisions based on current market conditions are inherently a losing strategy for intraday traders.
