Trade Analysis and Tips for the British Pound
The test of the 1.2950 level occurred just as the MACD indicator began to rise from the zero line, confirming a valid entry point for buying the pound. However, after gaining just 10 points, pressure on the pair returned.
The British pound seemed to gain strength for a brief moment after fresh statistics revealed an unexpectedly positive outlook for the UK economy. The prospect that the UK GDP for Q4 of the previous year was revised upward sparked hope for resilient economic growth. However, few are seriously betting on continued recovery, especially amid ongoing geopolitical challenges.
Today, U.S. inflation data will be released, providing insight into price stability and the likely impact on Federal Reserve monetary policy. In addition to the inflation gauge, changes in household income and spending will also draw significant attention. Rising income typically increases price pressure, as it tends to drive additional consumer spending—something the dollar may react to with strength.
As for intraday strategy, I will mainly rely on the implementation of Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.2950 (green line on the chart), targeting a rise toward 1.3002 (thicker green line on the chart). Around 1.3002, I will exit long positions and open short ones in the opposite direction, aiming for a 30–35 point pullback. A rise in the pound today can only be expected after weak U.S. data. Important! Before buying, make sure the MACD indicator is above the zero line 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 1.2919 level while the MACD indicator is in the oversold zone. This would limit the downward potential and trigger an upward reversal. A rise to the 1.2950 and 1.3002 levels can then be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after a breakdown of the 1.2919 level (red line on the chart), which should lead to a quick decline in the pair. The key target for sellers will be 1.2874, where I plan to exit shorts and open long positions in the opposite direction, aiming for a 20–25 point rebound. Sellers will step in if U.S. data is strong. Important! Before selling, make sure the MACD indicator is below the zero line and just starting to decline from it.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.2950 level while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a downward market reversal. A decline toward 1.2919 and 1.2874 can then be expected.
Chart Guide:
- Thin green line – entry price to buy the trading instrument
- Thick green line – projected Take Profit level or manual profit-taking area, as further growth above this level is unlikely
- Thin red line – entry price to sell the trading instrument
- Thick red line – projected Take Profit level or manual profit-taking area, as further decline below this level is unlikely
- MACD indicator – use overbought/oversold areas to guide market entries
Important: Beginner traders in the Forex market must be extremely cautious when deciding to enter trades. It's best to stay out of the market before important fundamental reports are released, to avoid sharp price swings. If you do choose to trade during news releases, always set stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.
And remember: to trade successfully, you must have a clear trading plan like the one presented above. Spontaneous trading decisions based on current market conditions are a losing strategy for intraday traders.
