Analysis of Trades and Tips for Trading the British Pound
The price test at 1.3245 coincided with a moment when the MACD indicator was just starting to move down from the zero mark, which confirmed the correct entry point for selling the pound. As a result, the pair only dropped by 5 pips, and that was all.
The dollar crashed after Donald Trump failed to fulfill his promises to wipe the Iranian nation off the face of the earth. The expectations of conflict escalation that previously supported demand for the dollar as a safe-haven currency have vanished, giving way to a more cautious optimism that has led to a resurgence in demand for the British pound. The sharp change in Washington's rhetoric and willingness to engage in dialogue with Tehran, especially concerning the critically important Strait of Hormuz, came as a shock to many. The earlier U.S. military aggression had created an atmosphere of uncertainty, thereby contributing to the dollar's strengthening. Now that the likelihood of resolving the military confrontation is increasing and the focus is shifting to a diplomatic resolution, traders are reassessing their risk outlook.
In the first half of the day, financial market participants will closely watch the release of key macroeconomic indicators from the United Kingdom. In particular, data on the construction sector PMI and the Halifax house price index are expected. The PMI indicator, reflecting the level of activity in the construction industry, may show further slowing. If the index falls further, it would indicate a contraction in commercial activity in this sector, creating additional risks for the economy as a whole. The data on Halifax house price indices will also be significant.
Regarding the intraday strategy, I will focus more on executing Scenarios #1 and #2.
Buying Scenarios
Scenario #1: I plan to buy the pound today upon reaching an entry point around 1.3465 (green line on the chart) with a target for growth to 1.3526 (thicker green line on the chart). At 1.3526, I plan to exit the market and immediately sell in the opposite direction, anticipating a movement of 30-35 pips from the entry point. Strong growth in the pound today can be expected after very strong data. Important! Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise from it.
Scenario #2: I also plan to buy the pound today if the price tests 1.3416 twice in a row while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. A rise to the resistance levels of 1.3465 and 1.3526 can be expected.
Selling Scenarios
Scenario #1: I plan to sell the pound today after it breaks the 1.3416 level (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the 1.3373 level, where I plan to exit the short positions and immediately buy in the opposite direction (anticipating a 20-25-pip move back from the level). Pressure on the pound may return at any moment. Important! Before selling, ensure that the MACD indicator is below the zero mark and just beginning to decline from it.
Scenario #2: I also plan to sell the pound today if the price tests 1.3465 twice in a row while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward market reversal. A decline to the support levels at 1.3416 and 1.3373 is expected.
What Is On The Chart:
- Thin green line – the entry price at which the trading instrument can be bought;
- Thick green line – the expected price where Take Profit can be set, or profits can be secured, as further growth above this level is unlikely;
- Thin red line – the entry price at which the trading instrument can be sold;
- Thick red line – the expected price where Take Profit can be set, or profits can be secured, as further decline below this level is unlikely;
- MACD Indicator. It is important to be guided by overbought and oversold zones upon entering the market.
Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to be out of the market before important fundamental reports are released to avoid being caught in sharp price fluctuations. If you choose 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 large volumes.
And remember, for successful trading, it is essential to have a clear trading plan, like the one presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.
