Analysis of Trades and Trading Advice for the British Pound
The test of 1.3193 occurred when the MACD indicator had just started moving downward from the zero line, confirming the validity of the entry point for a short position on the pound. As a result, the pair declined by only 10 points.
The pound entered the evening session in a weak position. The UK economic calendar is almost empty today, while U.S. Treasury yields remain high, which had a negative impact on GBP/USD during the first half of the day, bringing the pair close to its monthly low. The only significant pound-related release was the RICS House Price Balance for September, published overnight. It came in at -32%, compared with the forecast of -30% and the previous month's reading of -28%, indicating that the housing market is weakening faster than expected.
In the second half of the day, attention will shift to U.S. economic data. Figures on weekly initial jobless claims and changes in wholesale inventories will be released. Only very weak data could halt the bearish trend in the pound, as a moderate deviation from the forecast is unlikely to prompt traders to reconsider their positions. Yesterday evening, the dollar had already shown that it could ignore even the FOMC minutes, in which all 19 participants supported raising the interest rate to 3.75–4.00%, and maintain its strength due to high yields. Particular attention should be paid to the speech by FOMC member Alberto Musalem. His hawkish stance, unlike that of most of his colleagues, could put additional pressure on GBP/USD. This is particularly unfavorable for the pound because the Bank of England is facing a difficult choice between inflation and a weakening labor market, while Pill and Bailey only confirmed the complexity of this situation in the morning.
As for the intraday strategy, greater emphasis will be placed on the implementation of Scenarios #1 and #2.
Buy Signal
Scenario #1: The pound can be bought today when the entry point near 1.3197 is reached (the thin green line on the chart), with a target of 1.3219 (the thicker green line on the chart). Around 1.3219, the long position can be closed and a short position opened in the opposite direction (targeting a move of 30–35 points in the opposite direction from the level). Further gains in the pound today can be expected only if U.S. data are very weak. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.
Scenario #2: The pound can also be bought today if the price tests 1.3181 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and lead to a reversal to the upside. A rise toward the opposite levels of 1.3197 and 1.3219 can be expected.
Sell Signal
Scenario #1: The pound can be sold today after the 1.3181 level is broken (the red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers is 1.3163, where the short position can be closed and a long position opened in the opposite direction (targeting a move of 20–25 points in the opposite direction from the level). Strong pressure on the pound will return if economic data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started declining from it.
Scenario #2: The pound can also be sold today if the price tests 1.3197 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a reversal to the downside. A decline toward the opposite levels of 1.3181 and 1.3163 can be expected.
What Is Shown on the Chart:
- Thin green line – the entry price at which the trading instrument can be bought;
- Thick green line – the estimated price level at which Take Profit orders can be placed or profits can be taken manually, 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 estimated price level at which Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely;
- MACD indicator. When entering the market, it is important to take the overbought and oversold zones into account.
Important. Beginner Forex traders should make entry decisions very cautiously. Before the release of important fundamental reports, it is best to stay out of the market in order to avoid exposure to sharp price fluctuations. If trading during news releases, always use stop orders to minimize losses. Without stop orders, the entire trading account can be lost very quickly, especially when risk management is not used and large trading volumes are involved.
It is important to remember that successful trading requires a clear trading plan, such as the one presented above. Making trading decisions spontaneously based on the current market situation is inherently an unfavorable strategy for an intraday trader.
