Analysis of Trades and Trading Tips for the British Pound
The price test at 1.3393 coincided with when the MACD indicator had just begun to move upward from the zero mark, confirming a valid entry point for buying the pound. As a result, the pair rose by more than 100 pips.
Today, data is expected on the Industrial Order Balance from the Confederation of British Industry (CBI) and a speech by Bank of England Governor Andrew Bailey. These events are significant factors that could substantially impact the exchange rate of the British pound and the overall picture of the UK economy. The CBI's Industrial Order Balance is a leading indicator of industrial production. A positive value signals growth in new orders, typically indicating optimism in the manufacturing sector and a potential increase in business activity. Conversely, a negative value signals a decline in orders, which may foreshadow a slowdown in economic growth.
Equally important is Bailey's speech. The BoE Governor often uses such public appearances to discuss the current economic situation, inflation outlook, and future monetary policy. His comments may provide valuable clues about the Bank's intentions regarding interest rates and other monetary tools. The market will be highly sensitive to signals suggesting potential changes in BoE policy.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Scenario
Scenario #1: I plan to buy the pound today at the entry point around 1.3608 (green line on the chart) with a target to rise to 1.3662 (thicker green line). Around 1.3662, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip pullback). A pound rally today can only be expected after strong data.
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 in case of two consecutive tests of the 1.3557 level at a time when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to a market reversal to the upside. A rise to the opposite levels of 1.3608 and 1.3662 can be expected.
Sell Scenario
Scenario #1: I plan to sell the pound today after the price breaks below the 1.3557 level (red line on the chart), which would trigger a quick drop in the pair. The main target for sellers will be the 1.3515 level, where I plan to exit shorts and immediately open long positions in the opposite direction (expecting a 20–25 pip rebound from this level). Selling the pound is appropriate after weak data.
Important! Before selling, make sure the MACD indicator is below the zero mark and beginning to decline.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.3608 level when the MACD indicator is in the overbought zone. This will limit the pair's upside potential and lead to a downward market reversal. A decline toward the opposite levels of 1.3557 and 1.3515 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.
