Analysis of Trades and Trading Tips for the British Pound
The test of the 1.3562 level in the second half of the day coincided with the MACD indicator just beginning to move downward from the zero mark, which confirmed a valid entry point for selling the pound and resulted in the pair's decline of more than 30 pips.
Today, we also expect rather important labor market data. Weak figures for the change in the number of jobless claims in the UK and the unemployment rate may put pressure on the pair as early as the first half of the day. In addition, wage growth figures should be reviewed. However, behind these reports lies a more complex picture reflecting the overall condition of the British economy. An increase in jobless claims may indicate slowing economic growth and a rise in layoffs. In turn, a higher unemployment rate may signal declining labor demand and worsening job prospects. Wage growth is another key indicator that needs to be considered. If wage growth lags behind inflation, this could lead to falling real incomes and reduced consumer spending, negatively impacting economic growth. On the other hand, overly rapid wage growth could stoke inflation and force the Bank of England to keep interest rates high, which could also negatively affect the economy.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Scenario
Scenario #1: Today, I plan to buy the pound upon reaching the entry point of around 1.3550 (green line on the chart), with the target of rising to 1.3585 (thicker green line). Around 1.3585, I plan to exit long positions and open shorts in the opposite direction (aiming for a 30–35 pip move in the opposite direction). Relying on a significant rise in the pound is sensible only if the reports are solid.
Important! Before buying, ensure the MACD indicator is above the zero mark and starting to rise.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.3530 price level when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward reversal. Growth can be expected toward the opposite levels of 1.3550 and 1.3585.
Sell Scenario
Scenario #1: Today, I plan to sell the pound after updating the 1.3530 level (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be 1.3494, where I plan to exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 pip rebound from the level). Selling the pound is possible after a failed attempt to break out above the daily high.
Important! Before selling, make sure the MACD indicator is below the zero mark and starting to decline from it.
Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the 1.3550 level when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a reversal downward. A decline can be expected toward the opposite levels of 1.3526 and 1.3494.
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.
