Analysis of Trades and Trading Tips for the British Pound
The test of the price at 1.3177 coincided with the moment when the MACD indicator was beginning to move upward from the zero mark, confirming the correct entry point for buying the pound. However, the pair only rose by 15 pips before demand decreased.
Optimistic data on the Empire Manufacturing Index's growth in the U.S., which exceeded analysts' expectations, along with statements from Federal Reserve officials about a cautious approach to interest rate cuts, provided substantial support for the U.S. dollar against the British pound. The strengthening dollar, supported by macroeconomic indicators and central bank rhetoric, inevitably exerted pressure on the pound's position. The forthcoming economic data will largely determine the USD/GBP pair's further dynamics. Unfortunately, no macroeconomic data are expected this morning, so the only event will be a speech by Bank of England Monetary Policy Committee member Huw Pill.
Pill's statements on inflation, monetary policy, and the U.K.'s overall economy may influence the pound's exchange rate and investor sentiment. The market will closely analyze any signals regarding the Bank of England's future actions. A more hawkish stance, implying that rates will be maintained to curb inflation, could strengthen the pound. Conversely, softer comments hinting at the need for rate cuts to support the economy could exert downward pressure on the British currency.
Regarding the intraday strategy, I will also rely more on the implementation of scenarios #1 and #2.
Buy Scenarios
- Scenario #1: I plan to buy the pound today upon reaching an entry point around 1.3165 (green line on the chart), with a target at 1.3194 (the thicker green line on the chart). Near 1.3194, I plan to exit the market and open short positions immediately in the opposite direction (anticipating a movement of 30-35 pips from the level). One can expect the pound to rise today on positive statements from policymakers. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning to rise from it.
- Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the price at 1.3146 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. An increase towards the opposing levels of 1.3165 and 1.3194 can be expected.
Sell Scenarios
- Scenario #1: I plan to sell the pound today after updating the level of 1.3146 (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be the level of 1.3118, where I plan to exit the market and immediately buy back in the opposite direction (anticipating a movement of 20-25 pips from the level). The sellers of the pound will reveal themselves with a softer political stance. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decline from it.
- Scenario #2: I also plan to sell the pound today if the price tests 1.3165 twice in a row while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decrease towards the opposing levels of 1.3146 and 1.3118 can be expected.
What the Chart Shows:
- Thin Green Line: Entry price for buying the trading instrument.
- Thick Green Line: Estimated price where Take Profit can be set or where profit can be secured, as further increases above this level are unlikely.
- Thin Red Line: Entry price for selling the trading instrument.
- Thick Red Line: Estimated price where Take Profit can be set or where profit can be secured, as further decreases below this level are unlikely.
- MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.
Important: Beginner traders in the Forex market must be very cautious when making trading entry decisions. It is best to remain out of the market before the release of important fundamental reports to avoid getting caught in sharp price 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 do not use money management and trade with large volumes.
And remember that successful trading requires having a clear trading plan, similar to the one I presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.
