Analysis of Trades and Trading Tips for the British Pound
The price test at 1.3111 occurred when the MACD indicator had already moved significantly above the zero line, which limited the pair's upside potential at the end of the week. For this reason, I did not buy the pound. Shortly afterward, the second test of 1.3111 coincided with the MACD being in overbought territory, confirming a valid entry point for selling the pound, which led to a 60-pip decline in the pair.
Following the release of data showing a sharp drop in U.S. producer price inflation, the British pound strengthened, in line with the performance of other risk assets. However, by the end of the week, the pair failed to consolidate near weekly highs. The noticeable rise in the currency pair supported the bullish trend, which will likely continue developing over the current week. Previously published positive UK GDP data also provided support for the British currency.
The March U.S. PPI report was a welcome surprise for traders and the Federal Reserve. Instead of the forecasted increase, the index showed a significant decline, which put additional pressure on the dollar. This situation allows the Fed to ease monetary policy by lowering interest rates. Such measures would aim to stimulate economic growth, which is currently under threat due to trade conflicts initiated by the Trump administration.
Today, no UK economic data is scheduled, so GBP/USD buyers have every opportunity to maintain control of the market. However, volatility could drop sharply during the first half of the trading day.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3136 (green line on the chart), targeting a rise to 1.3221 (thicker green line on the chart). Around 1.3221, I plan to exit long positions and open short positions in the opposite direction, anticipating a 30–35 pip pullback. Today's pound rally is expected to continue the current uptrend.
Important: Before buying, ensure that the MACD indicator is above the zero line and beginning to rise.
Scenario #2: I also plan to buy the pound if the price tests 1.3088 twice a row while the MACD is in oversold territory. This will likely limit the pair's downside potential and lead to an upward reversal. In this case, I expect a rise toward the opposite levels of 1.3136 and 1.3221.
Sell Signal
Scenario #1: I plan to sell the pound after it breaks below 1.3088 (red line on the chart), which should trigger a sharp drop in the pair. The main target for sellers will be 1.3009, where I will exit short positions and immediately open long positions in the opposite direction, aiming for a 20–25 pip retracement. Be cautious with pound selling.
Important: Before selling, ensure the MACD indicator is below the zero line and starting to decline from it.
Scenario #2: I also plan to sell the pound if the price tests 1.3136 twice a row while the MACD is overbought territory. This will limit the pair's upside potential and lead to a reversal downward. In this case, expect a decline toward the opposite levels of 1.3088 and 1.3009.
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.
