Analysis of Trades and Trading Tips for the British Pound
The price level of 1.2615 was tested when the MACD indicator was already significantly above the zero mark, which restricted the upward potential of the currency pair, particularly towards the end of the North American trading session. For this reason, I decided not to buy the pound.
The British pound continues to show strength, facing no major obstacles to further growth, as highlighted by the recent update on the weekly high. The upcoming UK labor market data could further bolster this optimism.
Investors will closely analyze employment market data, and strong figures will support the bullish outlook for the pound. Conversely, if jobless claims rise, wages stagnate or decline, and the unemployment rate increases, consumer confidence will inevitably weaken. Investors will react to these indicators, as they are a barometer of the UK economy's health. Positive data could encourage the Bank of England to maintain a cautious monetary policy, possibly delaying rate cuts. Negative data, on the other hand, might push the BoE toward a more dovish stance to stimulate economic growth, which could weaken the pound but potentially support exports and domestic demand in the long run.
Regarding the intraday strategy, I will focus more on implementing Scenario #1 and Scenario #2.
Buy Signal
Scenario #1: I plan to buy the pound today when the entry price reaches 1.2607 (green line on the chart), targeting 1.2635 (thicker green line). Around 1.2635, I intend to exit buy trades and open sell positions in the opposite direction (expecting a 30-35 pip retracement from this level). The pound's continued growth can be expected as part of the ongoing uptrend. Important! Before buying, ensure the MACD indicator is above the zero mark and starting to rise.
Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the 1.2590 price level when the MACD indicator is in the oversold zone. This will limit the pair's downside potential and lead to a market reversal to the upside. Growth toward 1.2607 and 1.2635 can be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after a break below 1.2590 (red line on the chart), which should lead to a rapid decline. The key target for sellers will be 1.2564, where I intend to exit sell trades and immediately open buy positions in the opposite direction (expecting a 20-25 pip retracement). Selling the pound at higher levels is preferable. Important! Before selling, make sure the MACD indicator is below the zero mark and starting to decline from it.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.2607 price level when the MACD indicator is in the overbought zone. This will limit the pair's upside potential and lead to a market reversal downward. A decline toward 1.2590 and 1.2564 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.
