Analysis of Trades and Trading Tips for the British Pound
The price test at 1.3402 coincided with the MACD indicator just starting to move up from the zero mark, confirming the correct entry point for buying pounds. As a result, the pair rose by 40 pips.
Reports that the US GDP for the first quarter was revised downwards and news that the USA and Iran are continuing towards a peace agreement supported the pound. This dual impact, combining economic concerns with geopolitical easing, also created conditions for further declines in the dollar's exchange rate.
A downward revision to GDP always attracts investors' attention, as it signals slowing economic growth, which typically negatively affects a currency. In this case, it may indicate more fundamental problems in the US economy stemming from Trump's geopolitical actions.
Today, there is no economic data from the UK; however, a rather important speech by Bank of England Governor Andrew Bailey is expected. Markets are closely monitoring any hints about the BoE's future policy, and Andrew Bailey's words will carry weight. In the context of persistent inflation and global economic uncertainty, any signals of the central bank's determination to combat rising prices generally support the national currency. If the governor confirms a commitment to a tight monetary policy, it could act as a catalyst for strengthening the pound. Conversely, if Bailey's rhetoric is more dovish or if he expresses concerns about the impact of high rates on economic growth, it could lead to a correction in the pound. In this case, the dollar, which has recently been under pressure, could rebound on any signs of weakness from the BoE.
As for the intraday strategy, I will rely more on implementing scenarios No. 1 and No. 2.
Buying Scenarios
Scenario No. 1: I plan to buy the pound today when the entry point reaches around 1.3450 (green line on the chart), with a target at 1.3496 (thicker green line on the chart). Around 1.3496, I intend to exit my long positions and open short positions in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). Expecting a strong rise in the pound today can only be done after a breakthrough in the peace agreement. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.
Scenario No. 2: I also plan to buy the pound today if the price tests 1.3427 twice in a row, when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. One can expect a rise to opposite levels of 1.3450 and 1.3496.
Selling Scenarios
Scenario No. 1: I plan to sell the pound today after the level at 1.3427 (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 level of 1.3389, where I intend to exit my shorts and also open longs immediately in the opposite direction (expecting a movement of 20-25 pips in the opposite direction from the level). Pressure on the pound will return if Bailey takes a soft tone. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting its decline from it.
Scenario No. 2: I also plan to sell the pound today if two consecutive tests of 1.3450 occur while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downwards. One can expect a decline to opposite levels of 1.3427 and 1.3389.
What the Chart Indicates:
- Thin Green Line: Entry price for buying the trading instrument;
- Thick Green Line: Estimated price where take profit can be set or profits can be locked in, as further growth above this level is unlikely;
- Thin Red Line: Entry price for selling the trading instrument;
- Thick Red Line: Estimated price where take profit can be set or profits can be locked in, as further decline below this level is unlikely;
- MACD Indicator: When entering the market, it's important to consider the overbought and oversold zones.
Important Note:
Novice Forex traders must be very cautious when making market entry decisions. It is best to stay out of the market before important fundamental reports are released to avoid sharp fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
Remember that successful trading requires a clear trading plan, similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
