Analysis of Trades and Tips for Trading the British Pound
The test of the 1.2323 level occurred when the MACD indicator had moved significantly above the zero mark, clearly limiting the pair's upward potential. For this reason, I did not buy the pound.
Recent economic news related to the UK and the US has created a tense backdrop in the currency market. Market participants are cautious ahead of an important speech by President Trump, which could address trade and economic relations between countries. Any new indications of tariffs could exert significant pressure on the pound. Currently, GBP/USD is fluctuating within a narrow range, and traders are closely watching for any signals from the US administration. Changes in policy or the president's rhetoric could trigger sharp market reactions, increasing risk for participants. Additionally, weak UK economic data further limits the pound's growth potential.
Today's US labor market data could also impact the GBP/USD pair, although the data would need to deviate significantly from economists' forecasts. Typically, the weekly report on initial jobless claims has minimal impact on the currency market, as traders often price in these figures based on broader trends rather than individual reports. Even if the numbers show unexpected changes, the market reaction may be muted. However, if US labor market data confirms or challenges expectations for economic growth, it could lead to revised projections for Federal Reserve interest rates, thereby influencing the dollar's exchange rate.
For intraday strategy, I will rely on implementing Scenario #1 and Scenario #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound if the price reaches 1.2335 (green line on the chart) with a target of 1.2369 (thicker green line on the chart). At 1.2369, I will exit the market and open sell positions in the opposite direction (expecting a movement of 30–35 points in the opposite direction from the level). A continuation of the upward trend would justify expectations for a rise in the pound today.Important: Before buying, ensure the MACD indicator is above the zero mark and is just beginning its upward movement.
Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the 1.2313 level, with the MACD indicator in the oversold zone. This will limit the pair's downward potential and lead to a market reversal upward. Growth can be expected to the opposite levels of 1.2335 and 1.2369.
Sell Signal
Scenario #1: I plan to sell the pound after the level 1.2313 (red line on the chart) is updated, which will lead to a quick decline in the pair. The key target for sellers will be 1.2275, where I will exit the market and immediately open buy positions in the opposite direction (expecting a movement of 20–25 points in the opposite direction from the level). Sellers could exert pressure at any moment.Important: Before selling, ensure the MACD indicator is below the zero mark and is just beginning its downward movement.
Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the 1.2335 level, with the MACD indicator in the overbought zone. This will limit the pair's upward potential and lead to a market reversal downward. A decline can be expected to the opposite levels of 1.2313 and 1.2275.
Chart Details:
- Thin Green Line: Entry price for buying the trading instrument.
- Thick Green Line: Suggested price for setting Take Profit or manually fixing profits, as growth above this level is unlikely.
- Thin Red Line: Entry price for selling the trading instrument.
- Thick Red Line: Suggested price for setting Take Profit or manually fixing profits, as further declines below this level are unlikely.
- MACD Indicator: When entering the market, it is crucial to monitor overbought and oversold zones.
Important Notes:
Beginner traders in the Forex market must exercise extreme caution when deciding on market entries. Before the release of significant fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always use stop orders to minimize losses. Without stop orders, you could quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember, successful trading requires a clear trading plan, such as the example presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.
The material has been provided by InstaForex Company - www.instaforex.com
