Analysis of Trades and Trading Tips for the British Pound
The price test at 1.2994 occurred when the MACD indicator had just begun moving down from the zero line, confirming a valid entry point for selling the pound. This resulted in a drop of more than 100 pips for the pair.
The British pound weakened following the release of upbeat U.S. employment data. Additional pressure on risk-related assets came from Federal Reserve Chair Jerome Powell's comments, indicating that the Fed is not planning to respond to Trump's imposed trade tariffs. As a result, there was a surge in GBP/USD selling toward the end of last week.
Today, only the HBOS House Price Index will be published in the UK, which is unlikely to provide strong support for the pound, so there's no need to rush into GBP/USD buying. Investors will likely focus on more important macroeconomic indicators from the U.S.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today if it reaches the entry-level at 1.2931 (green line on the chart), with a target at 1.3002 (thicker green line). At 1.3002, I plan to exit the buy trade and open a sell position, expecting a 30–35 pip pullback. However, expecting significant pound growth today will be difficult. Important! Before buying, ensure the MACD indicator is above the zero line and beginning to rise.
Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the 1.2882 level while the MACD indicator is in the oversold zone. This would limit the downside potential and may trigger a reversal to the upside. A rise toward 1.2931 and 1.3002 is expected.
Sell Signal
Scenario #1: I plan to sell the pound today after a break below the 1.2882 level (red line on the chart), which will likely trigger a sharp decline. The target for sellers is 1.2818, where I plan to exit the short and open a buy trade in the opposite direction, aiming for a 20–25 pip pullback. Selling the pound aligns with the new bearish trend. Important! Before selling, make sure the MACD indicator is below the zero line and just beginning to fall from it.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.2931 level while the MACD is in the overbought zone. This would limit the pair's upside and lead to a reversal downward. A decline toward 1.2882 and 1.2818 is likely.
What's on the Chart:
- The thin green line represents the entry price where the trading instrument can be bought.
- The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
- The thin red line represents the entry price where the trading instrument can be sold.
- The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
- The MACD indicator should be used to assess overbought and oversold zones when entering the market.
Important Notes:
- Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
- Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.
