Analysis of Trades and Trading Tips for the British Pound
The test of the 1.3555 level in the afternoon coincided with when the MACD indicator had already moved significantly upward from the zero mark, limiting the pair's upside potential. For this reason, I did not buy the pound.
Yesterday's speech by Federal Reserve Chair Jerome Powell did not touch on monetary policy, so the U.S. dollar failed to gain support even after the weak ISM data. Investors, deprived of clear signals from the central bank, remained in anticipation. The situation is further complicated by the fact that other major central banks, such as the Bank of England and the European Central Bank, are showing a more dovish stance on inflation. The Federal Reserve's lack of similar determination creates the impression that the U.S. central bank is falling behind the curve, which does not instill confidence among dollar holders.
Parliamentary hearings on the BoE's monetary policy report are scheduled today, so volatility in the GBP/USD pair is unavoidable. Speeches by BoE officials before members of Parliament traditionally attract increased attention and fuel speculation in the currency market. Investors will closely monitor the speakers' rhetoric to catch hints about the central bank's next steps regarding interest rates. Attention will focus on assessing the current economic situation in the UK and the forecasts for inflation. Any signals suggesting that the Bank of England is satisfied with the pace of inflation decline and is ready for a softer monetary policy approach could trigger a drop in the pound.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Scenario
Scenario #1: Today, I plan to buy the pound when the entry point around 1.3526 (green line on the chart) is reached, aiming for growth to the 1.3564 level (thicker green line on the chart). At 1.3564, I plan to exit from purchases and open short positions in the opposite direction (aiming for a 30–35 pip move from the entry level). Counting on strong pound growth will only be reasonable after favorable statements.
Important: Before buying, ensure that the MACD indicator is above the zero line and starting to rise.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.3509 level when the MACD indicator is in the oversold area. This would limit the pair's downside potential and lead to a market reversal upward. A rise toward 1.3526 and 1.3564 can be expected.
Sell Scenario
Scenario #1: I plan to sell the pound today after updating the 1.3509 level (red line on the chart), which should lead to a quick decline of the pair. The key target for sellers will be the 1.3478 level, where I plan to exit sales and immediately open purchases in the opposite direction (aiming for a 20–25 pip move). Selling the pound can be considered after a failed attempt to break above the daily high.
Important: Before selling, ensure that the MACD indicator is below the zero line and starting to decline.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.3526 level when the MACD indicator is in the overbought area. This would limit the pair's upside potential and lead to a market reversal downward. A decline toward 1.3509 and 1.3478 can be expected.
What's on the Chart:
- The thin green line represents the entry price where the trading instrument can be bought.
- The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
- The thin red line represents the entry price where the trading instrument can be sold.
- The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
- The MACD indicator should be used to assess overbought and oversold zones when entering the market.
Important Notes:
- Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
- Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.
