Analysis of Trades and Trading Tips for the British Pound
The test of the 1.3400 level in the second half of the day coincided with the MACD indicator just beginning to move upward from the zero line, confirming a correct entry point for buying the pound and resulting in a 20-pip rise in the pair before the bullish momentum faded.
Yesterday's weak U.S. consumer confidence data put pressure on the dollar, strengthening the British pound. The confidence index came in significantly below economists' forecasts, quickly weakening the dollar's position.
Today, attention will be focused only on the UK Nationwide House Price Index and a speech by Claire Lombardelli, Deputy Governor of the Bank of England for Monetary Policy. The Nationwide House Price Index is generally not a major indicator of the UK housing market's health, but its dynamics allow for an assessment of key pricing factors such as interest rates, affordability, and demand. In the current climate of economic uncertainty and persistently high interest rates, the Nationwide data may provide insight into the housing market's resilience to external factors.
Claire Lombardelli's speech represents another important event. Her comments on monetary policy could shed light on the BoE's plans regarding interest rates and other measures to control inflation and support economic growth. Since the BoE is still only considering further rate cuts, a cautious tone from Lombardelli could support the pound.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Scenario
Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3402 (green line on the chart), with a target of rising to 1.3449 (thicker green line). Around 1.3449, I plan to exit long positions and open short positions in the opposite direction, targeting a 30–35 pip retracement. Pound growth today is only realistic if the data comes out strong.
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 in case of two consecutive tests of the 1.3377 level while the MACD indicator is in the oversold zone. This would limit the pair's downside potential and lead to an upward reversal. A move toward 1.3402 and 1.3449 can be expected.
Sell Scenario
Scenario #1: I plan to sell the pound after a breakout below 1.3377 (red line on the chart), which should trigger a sharp decline. The key target for sellers will be 1.3334, where I will exit the short position and immediately open a long position, aiming for a 20–25 pip move in the opposite direction. A dovish tone from Lombardelli could justify pound selling.
Important: Before selling, ensure the MACD indicator is below the zero line and starting to decline.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.3402 level while the MACD indicator is in the overbought zone. This would limit the pair's upside potential and lead to a downward reversal. A decline toward 1.3377 and 1.3334 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.
