Analysis of Trades and Trading Tips for the British Pound
The test of the price level at 1.3444 coincided with the moment when the MACD indicator was just beginning to move down from the zero mark, confirming the correct entry point for selling the pound. As a result, the pair declined to the support area at 1.3421.
Yesterday, demand for the dollar quickly returned following news that the US and Iran continue to exchange strikes in the Middle East. Geopolitical tension traditionally drives demand for the US dollar as a safe haven, as investors seek refuge in more stable assets. Additional support for the dollar was provided by the strong ISM services activity index, which rose to 54.5. This figure, exceeding analysts' expectations, indicates the ongoing strength of the US economy despite global challenges. Activity in the services sector is an important component of GDP, and its steady growth suggests that the US economy remains resilient.
Today, the first half of the day in the UK financial markets is expected to be extremely volatile, as investors await the publication of several key economic indicators and a speech by a key monetary policy figure. Attention will focus on the UK construction sector's PMI index. This indicator reflects business activity in one of the economy's key sectors and provides insights into the current state of the housing market and overall economic sentiment.
In addition to the data, markets are also keenly anticipating the speech from Bank of England Governor Andrew Bailey. The central bank leader typically uses such platforms to convey the central bank's position on the current economic situation, inflation trends, and the monetary policy outlook. Given the uncertainty in global markets and the internal challenges facing the UK economy, there is an expectation for Bailey to deliver a firm stance, which could temporarily support the pound but might be detrimental to the economy as a whole.
In terms of intraday strategy, I will focus more on implementing scenarios #1 and #2.
Buy Scenarios
Scenario #1: I plan to buy the pound today when the price reaches around 1.3445 (the green line on the chart), with a target of 1.3480 (the thicker green line on the chart). At level 1.3480, I intend to exit my long positions and open short positions in the opposite direction, expecting a movement of 30-35 pips back from that level. Strong growth in the pound today can only be expected after good data. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning to rise from it.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the price 1.3420 when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward market reversal. Growth can be expected towards the opposing levels of 1.3445 and 1.3480.
Sell Scenarios
Scenario #1: I plan to sell the pound today after it breaks below 1.3420 (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be 1.3390, where I intend to exit my shorts and immediately buy back in the opposite direction, expecting a move of 20-25 pips back from the level. Pressure on the pound will return in case of weak data. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decline from it.
Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the price 1.3445 when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a downward market reversal. A decrease can be expected towards the opposing levels of 1.3420 and 1.3390.
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.
