Analysis of Trades and Trading Tips for the British Pound
The test of the 1.2661 price level occurred when the MACD indicator started rising from the zero mark, which confirmed the correct entry point for buying the pound. As a result, we observed growth toward the target level of 1.2693. Selling from there on a rebound also allowed a profit of approximately 15 pips.
Yesterday, the British pound strengthened against the US dollar, reflecting negative economic data from the United States. The manufacturing activity index, published at the end of the day, showed a decline, raising concerns about the sustainability of the US economy and weakening the dollar's position.
Today's data could create challenges for the British pound. In recent months, there have been significant fluctuations in the number of jobless claims in the UK. Economists forecast a rise in this indicator today, which could signal economic trouble. An increase in unemployment could indicate a slowdown in economic activity and potential issues in various sectors. However, context is key: possible fluctuations may be caused by seasonal factors or short-term economic changes.
At the same time, if the unemployment rate remains stable, it would be a positive signal, suggesting that certain sectors of the economy are still supporting the labor market despite rising claims for unemployment benefits. Job stability is critical for maintaining consumer confidence and broader economic stability.
Growth in average earnings will also play a pivotal role. If wages increase, they could offset the negative effects of higher unemployment, fostering consumer confidence and encouraging market spending.
As for the intraday strategy, I will rely on implementing Scenario #1 and Scenario #2.
Buy Signal
Scenario #1: I plan to buy the pound today upon reaching the entry point at 1.2693 (green line on the chart) with a target of rising to 1.2721 (thicker green line on the chart). Around 1.2721, I plan to exit purchases and open sell positions in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). Counting on the pound's growth today will only be possible after strong data.
Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to move upward.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.2676 price level when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to a reversal of the market upward. Growth toward the opposite levels, 1.2693 and 1.2721, can be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after breaking below the 1.2676 level (red line on the chart), which will lead to a sharp decline in the pair. The key target for sellers will be 1.2653, where I plan to exit sales and immediately open buy positions in the opposite direction (expecting a movement of 20-25 pips in the opposite direction from the level). Selling the pound will only be valid in case of a rise in the UK unemployment rate.
Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to move downward.
Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the 1.2693 price level 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 decline toward the opposite levels, 1.2676 and 1.2653, can be expected.
Chart Notes
- Thin green line: Entry price for buying the trading instrument.
- Thick green line: A suggested target for Take Profit or manually locking in profits, as further growth above this level is unlikely.
- Thin red line: Entry price for selling the trading instrument.
- Thick red line: A suggested target for Take Profit or manually locking in profits, as further decline below this level is unlikely.
- MACD Indicator: Critical for identifying overbought and oversold zones to guide market entry decisions.
Important Note for Beginner Traders
- Always approach market entry decisions cautiously.
- Avoid trading during major news releases to sidestep volatile price swings.
- If trading during news releases, always set stop-loss orders to minimize losses.
- Trading without stop-loss orders or money management practices can quickly deplete your deposit, especially when using large volumes.
- A clear trading plan, like the one outlined above, is essential for successful trading. Spontaneous trading decisions based on current market conditions are inherently disadvantageous for intraday traders.
