Analysis of Trades and Trading Tips for the British Pound
The price test at 1.3154 occurred when the MACD indicator had already moved significantly below the zero mark, which limited the pair's downside potential. For this reason, I did not sell the pound. I did not find any other valid entry points.
Yesterday's lack of UK data helped the pound hold onto its intraday highs from the first half of the day. Today, however, the situation could be much more complex. Strong UK labor market data is needed for GBP/USD to make a solid upward move. If even one of these indicators disappoints, the British pound could face significant pressure.
The number of jobless claims in the UK is an important barometer of the national labor market's health. An increase in claims signals negative trends in employment, which could weaken the pound. The unemployment rate, the percentage of unemployed individuals in the labor force, is another key indicator of the country's economic stability. A high unemployment rate may indicate an economic downturn, lower consumer activity, and increased social tensions. On the other hand, low unemployment may spur wage growth and inflation.
Average earnings growth reflects changes in workers' income. An increase in average wages may result from higher productivity, a greater demand for skilled labor, and inflationary pressure. A decline in average wages would also weaken the pound.
If the market ignores negative factors, the chances for continued upward movement in GBP/USD will increase significantly.
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 1.3225 (green line on the chart) with a target at 1.3288 (thicker green line on the chart). Around 1.3288, I plan to exit long positions and open short positions in the opposite direction, aiming for a 30–35 pip pullback. A bullish continuation can be expected today if the data are favorable.
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 today if the price tests 1.3190 twice consecutively while the MACD is in the oversold zone. This would limit the pair's downside potential and trigger a reversal to the upside. Targets would be 1.3225 and 1.3288.
Sell Signal
Scenario #1: I plan to sell the pound today after a breakout below 1.3190 (red line on the chart), which would likely lead to a sharp decline. The main target for sellers is 1.3135, where I plan to exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 pip pullback). Be very cautious when selling the pound.
Important! Before selling, make sure the MACD is below the zero line and just beginning to decline.
Scenario #2: I also plan to sell the pound today if the price tests 1.3225 twice consecutively while the MACD is in the overbought zone. This would limit the upside potential and trigger a reversal downward. Targets would be 1.3190 and 1.3135.
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.
