Analysis of Trades and Trading Advice for the British Pound
The test of the 1.2135 price level in the first half of the day coincided with the MACD indicator just starting to move downward from the zero line. This confirmed a valid entry point for selling the pound in line with the downward trend. Although not immediate, the pound eventually dropped by 30 points.
Considering the current bearish sentiment for the British pound, traders should closely monitor key support and resistance levels. On the chart, GBP/USD shows pressure from the downward trend. However, a market correction can occur at any moment. Traders should rely on technical signals and oscillators displayed on the chart, which may indicate a potential reversal. It's also essential to consider the psychological aspect of trading. While the bearish trend may cause anxiety among investors, it's crucial to remain calm and adhere to a pre-determined plan. The absence of significant US fundamental statistics today may allow sellers to act more aggressively, pushing the pound even lower.
For the intraday strategy, I will focus on implementing Scenario #1 and Scenario #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound if the price reaches 1.2145 (green line on the chart) with the target of rising to 1.2209 (thicker green line on the chart). Around 1.2209, I plan to exit purchases and open short positions for a pullback of 30–35 points in the opposite direction. Any rise in the pound today will likely be part of a minor correction.Important! Before buying, ensure that the MACD indicator is above the zero line and just starting to rise from it.
Scenario #2: I also plan to buy the pound if there are two consecutive tests of the 1.2098 price level, with the MACD indicator in the oversold zone. This will limit the pair's downward potential and prompt a reversal upward. Expect growth to opposing levels of 1.2145 and 1.2209.
Sell Signal
Scenario #1: I plan to sell the pound after the level 1.2098 (red line on the chart) is breached, which will likely lead to a quick drop in the pair. Sellers' primary target will be 1.2038, where I will exit sales and immediately open long positions for a 20–25 point rebound in the opposite direction. Sellers can reassert themselves at any moment to continue the trend.Important! Before selling, ensure that the MACD indicator is below the zero line and just starting to decline from it.
Scenario #2: I also plan to sell the pound if there are two consecutive tests of the 1.2145 price level, with the MACD indicator in the overbought zone. This will limit the pair's upward potential and trigger a reversal downward. Expect a decline to opposing levels of 1.2098 and 1.2038.
Chart Key:
- Thin green line: Entry price for buying the trading instrument.
- Thick green line: Target price where Take Profit can be set, or profits can be manually locked, as further growth beyond this level is unlikely.
- Thin red line: Entry price for selling the trading instrument.
- Thick red line: Target price where Take Profit can be set, or profits can be manually locked, as further declines beyond this level are unlikely.
- MACD Indicator: When entering the market, it's crucial to rely on overbought and oversold zones.
Important Notes:
Beginner Forex traders must exercise caution when making market entry decisions. Before significant fundamental reports are released, it's best to stay out of the market to avoid sudden price swings. If trading during news releases, always use stop-loss orders to minimize potential losses. Without stop-loss orders, you could quickly lose your entire deposit, especially if trading large volumes without proper money management.
Always remember that successful trading requires a clear trading plan, like the example provided above. Making spontaneous decisions based on the current market situation is an inherently losing strategy for intraday traders.
The material has been provided by InstaForex Company - www.instaforex.com
