Analysis of Trades and Tips for Trading the British Pound
The price test at 1.3248 occurred when the MACD indicator had moved significantly above the zero mark, limiting the pair's upward potential. For this reason, I did not buy the pound.
The resignation of UK Prime Minister Keir Starmer helped the pound rally. Markets often react to predictable events by pricing them in in advance. However, in this case, the pound's reaction was more restrained, which may indicate the presence of other, more substantial factors influencing its exchange rate. These factors include, first and foremost, the country's economic situation, inflation dynamics, and the Bank of England's policy. Any signs of slowing growth or, conversely, accelerating price pressure can either support or weaken the pound's position, negating the effect of the change in political leadership.
This morning's session promises to be eventful as markets await the release of key UK macroeconomic indicators. In particular, attention will focus on the PMI indices for the manufacturing and services sectors, as well as the composite PMI index. These indicators traditionally serve as barometers of the British economy, reflecting business sentiment, order volumes, production, and employment. Positive or negative deviations from forecasts can significantly impact the value of the British pound and overall investor sentiment.
Of particular interest is the speech of Bank of England Monetary Policy Committee member Martin Taylor. In the context of ongoing inflation uncertainty and changing economic outlooks, his comments may provide valuable insight into the central bank's future intentions regarding monetary policy. Any hints about potential changes in interest rates, whether an increase or maintenance at current levels, will be closely scrutinized by the market.
As for the intraday strategy, I will primarily rely on the implementation of scenarios No. 1 and No. 2.
Buy Scenarios
Scenario No. 1: I plan to buy the pound today upon reaching an entry point around 1.3248 (green line on the chart) with a target to rise to the level of 1.3296 (thicker green line on the chart). At 1.3296, I plan to exit the market and sell in the opposite direction, targeting a move of 30-35 pips from the entry point. One can only expect the pound to rise today in light of strong UK data. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning to rise from it.
Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of the price 1.3225 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. One can expect growth to the opposite levels of 1.3248 and 1.3296.
Sell Scenarios
Scenario No. 1: I plan to sell the pound today after updating the level of 1.3225 (red line on the chart), which will lead to a swift decline of the pair. The key target for sellers will be the level of 1.3170, where I plan to exit the short positions and also buy back immediately in the opposite direction, targeting a movement of 20-25 pips in the reverse direction from the level. Bad news will increase pressure on the pound. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decline from it.
Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of the price 1.3248 when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. One can expect a decline to the opposite levels of 1.3225 and 1.3170.
What's on the Chart:
Thin green line – entry price for buying the trading instrument;
Thick green line – presumed price level for placing Take Profit or manually securing profits, as further growth above this level is unlikely;
Thin red line – entry price for selling the trading instrument;
Thick red line – presumed price level for placing Take Profit or manually securing profits, as further decline below this level is unlikely;
MACD Indicator. When entering the market, it is important to consider the overbought and oversold zones.
Important: Beginner traders in the Forex market must be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid being caught in 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 using money management and are trading large volumes.
And remember, for successful trading, you need 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.
