Trade Analysis and Recommendations for the British Pound
The first test of the price at 1.3305 coincided with the moment when the MACD indicator began to move below the zero mark, confirming a valid entry point for selling the pound. As a result, the pair fell by more than 50 pips.
Pound sellers appeared after Reeves' statements about wanting closer ties with the EU, while the country had only just recovered from Brexit, which affected sentiment among pound buyers. During Asian trading, the decline in GBP/USD continued as disagreements within the Federal Reserve began to weigh on buyers of risk assets.
This morning, data will be released regarding the number of approved mortgage applications in the United Kingdom, the volume of consumer lending, and the size of the M4 money supply. These indicators can provide certain information about consumer lending and the state's monetary policy. In particular, mortgage data may indicate trends in the housing market, which is facing issues due to high interest rates. The volume of net loans to individuals reflects citizens' willingness to borrow, an important indicator of consumer spending. Lastly, the M4 money aggregate can provide insight into the volume of money in the economy and, consequently, inflation risks. However, it should be emphasized that the impact of these reports on the British pound's exchange rate may currently be weakened, as market attention is focused on global factors, namely: disagreements within the Federal Reserve regarding future monetary policy and the possibility of strengthening ties between the UK and the European Union. Therefore, market reactions to British economic data are likely to be short-lived and limited unless they significantly differ from forecasted values.
As for intraday strategies, I will rely more on the implementation of scenarios №1 and №2.
Buying Scenarios
Scenario №1: Today, I plan to buy the pound when the entry point reaches around 1.3251 (green line on the chart), with a target for growth to 1.3292 (thicker green line on the chart). Around 1.3292, I will exit my long positions and open shorts in the opposite direction (anticipating a movement of 30-35 pips in the opposite direction from the level). One can expect the pound to grow today as a continuation of the correction. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting an upward move.
Scenario №2: I also plan to buy the pound today if the price tests 1.3228 twice in a row, when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to a market reversal. An increase is expected in the opposing levels of 1.3251 and 1.3292.
Selling Scenarios
Scenario №1: I plan to sell the pound today after the level at 1.3228 (red line on the chart) is reached, which will lead to a rapid decline in the pair. The key target for sellers will be the 1.3196 level, where I will exit my shorts and immediately open longs in the opposite direction (anticipating a 20-25-pip move in the opposite direction from the level). Pound sellers may return to the market at any moment. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting its downward move.
Scenario №2: I also plan to sell the pound today if two consecutive tests of the 1.3251 price level occur while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a market reversal. A decrease can be expected to the opposing levels of 1.3228 and 1.3196.
What's on the Charts:
- Thin Green Line: Entry price for buying the trading instrument.
- Thick Green Line: Estimated price for setting Take Profit or manually securing profits since further growth above this level is unlikely.
- Thin Red Line: Entry price for selling the trading instrument.
- Thick Red Line: Estimated price for setting Take Profit or manually securing profits since further decline below this level is unlikely.
- MACD Indicator: Important to follow the overbought and oversold zones when entering the market.
Important: Beginner traders in the Forex market need to make entry decisions very cautiously. It is best to stay out of the market before important fundamental reports to avoid sharp fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you are not employing money management and are trading large volumes.
And remember, to trade successfully, you need a clear trading plan like the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
