Analysis of Trades and Trading Tips for the British Pound
The price test at 1.3135 occurred when the MACD indicator moved significantly below the zero line, limiting the pair's downside potential. For this reason, I did not sell the pound—especially considering the bullish market observed in the first half of the day.
According to rumors, British politicians are expected to begin trade negotiations with Trump soon regarding tariffs, and if the dialogue proves successful, this could strengthen the pound. However, it's worth noting that the success of these talks is far from guaranteed. Trump is known for his unpredictability and uncompromising stance on trade agreements. Any concessions from the UK may require significant compromises, potentially triggering domestic criticism. Nevertheless, the prospect of interest rate cuts by the Bank of England remains highly appealing for the British economy, which has recently shown signs of slowing growth.
Today, investors are paying close attention to the upcoming release of the UK Construction Purchasing Managers' Index (PMI). This index is a key economic indicator, as the construction sector responds sensitively to changes in interest rates, consumer demand, and the overall economic environment. The PMI reading will reflect current activity in the construction sector, including new project volumes, employment, and material costs. A value above 50 points indicates expansion, while a reading below 50 signals contraction. Strong figures will likely trigger another wave of growth for the pound against the dollar.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today at the entry point around 1.3115 (green line on the chart), targeting 1.3188 (thicker green line on the chart). Around 1.3188, I plan to exit the long trade and open a short position in the opposite direction (expecting a 30–35 pip move). The pound's rise may continue within the context of the ongoing uptrend. Important! Before buying, ensure the MACD indicator is above the zero line and starting to rise.
Scenario #2: I also plan to buy the pound if there are two consecutive tests of the 1.3077 level while the MACD indicator is in the oversold zone. This would limit the pair's downside potential and trigger an upward reversal. A rise toward 1.3115 and 1.3188 can be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after the 1.3077 level is broken (red line on the chart), which could lead to a rapid decline in the pair. The main target for sellers will be 1.3014, where I plan to exit the short trade and immediately open a buy position in the opposite direction (expecting a 20–25 pip move). There is no need to rush to sell the pound. Important! Before selling, make sure the MACD indicator is below the zero line and starting to decline from it.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.3115 level while the MACD indicator is in the overbought zone. This would limit the pair's upside potential and trigger a downward reversal. A decline toward the opposite levels of 1.3077 and 1.3014 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.
