Analysis of Trades and Trading Tips for the British Pound
The price test at 1.3268 occurred when the MACD indicator moved significantly above the zero line, limiting the pair's upside potential. For that reason, I did not buy the pound.
Today, the US dollar weakened significantly following reports that China is unwilling to make concessions to the US in the trade war and that Federal Reserve Chair Jerome Powell may soon be replaced due to strong dissatisfaction from President Donald Trump. The uncertainty around the Fed's leadership is putting pressure on the dollar. Rumors of Powell's possible resignation have raised concerns about the independence of the Fed and its ability to make sound monetary policy decisions. The combination of these factors creates a negative backdrop for the US currency, providing a case for further dollar weakness in the coming weeks—especially if US-China trade talks stall and the Fed leadership issue remains unresolved.
Since no economic data is expected from the UK today, there is even less incentive to sell the British pound under current market conditions. Market participants are unlikely to push against the upward trend without relevant information from the UK, so sellers may not gain traction at current highs. Moreover, the lack of UK data may paradoxically support the pound's stability. With no apparent reason for pessimism, investors are reluctant to part with the pound for fear of missing out on potential upside from future favorable news.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today at the entry point of 1.3399 (green line on the chart), targeting a rise to 1.3446 (thicker green line). Around 1.3446, I plan to exit long positions and open short trades in the opposite direction (targeting a 30–35 pip pullback). This strategy assumes continued upward momentum.
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 in case of two consecutive tests of the 1.3356 level while the MACD is in the oversold zone. This would limit the downside potential and prompt an upward market reversal. Target levels would be 1.3399 and 1.3446.
Sell Signal
Scenario #1:I plan to sell the pound after a break below 1.3356 (red line on the chart), which could lead to a sharp drop in the pair. The key target for sellers is 1.3304, where I intend to exit shorts and immediately open long positions (targeting a 20–25 pip rebound).
Important: Before selling, ensure the MACD indicator is below the zero line and beginning to fall from it.
Scenario #2: I also plan to sell the pound in case of two consecutive tests of the 1.3399 level while the MACD is in the overbought zone. This would limit the pair's upside potential and likely lead to a downward reversal—expected targets: 1.3356 and 1.3304.
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.
