Trade analysis and advice on trading the British pound
The test of the price at 1.2423 in the first half came at a moment when the MACD indicator had descended significantly from the zero mark, limiting the further downward potential of the pair. For this reason, I did not sell. I couldn’t wait for a retest of this price for scenario #2 to unfold. The absence of important statistics from the UK allowed the pound to hold at current levels and even partially offset the morning decline. Now attention should be turned to the report on changes in US durable goods orders, where weak indicators will allow pound buyers to regain all their positions and continue yesterday’s trend. Strong data may harm the pair’s upward potential. As for the intraday strategy, I will rely more on scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound when the entry point reaches around 1.2451 (green line on the chart) with the target of rising to the level of 1.2510 (thicker green line on the chart). At around 1.2510, I will exit purchases and open sales in the opposite direction (aiming for a movement of 30-35 points in the opposite direction from the level). Pound growth today can only be expected after weak US data within an upward correction. Important! Before buying, make sure that the MACD indicator is above the zero mark and is just starting to rise from it.
Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the price at 1.2421 when the MACD indicator is in the oversold zone. This will limit the downward potential of the pair and lead to a reversal of the market upwards. Expect a rise to the opposite levels of 1.2451 and 1.2510.
Sell Signal
Scenario #1: I plan to sell the pound today after updating the level of 1.2421 (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the level of 1.2364, where I will exit sales and immediately open purchases in the opposite direction (aiming for a movement of 20-25 points in the opposite direction from the level). Sellers will show themselves in case of a lack of activity from buyers after a slight upward correction and strong US data. Important! Before selling, make sure that the MACD indicator is below the zero mark and is just starting to decrease from it.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the price at 1.2451 when the MACD indicator is in the overbought zone. This will limit the upward potential of the pair and lead to a reversal of the market downwards. Expect a decline to the opposite levels of 1.2421 and 1.2364.
On the Chart:
Thin green line – entry price, at which the trading instrument can be bought.
Thick green line – expected price, where you can place Take Profit or manually take profits, as further growth above this level is unlikely.
Thin red line – entry price, at which the trading instrument can be sold.
Thick red line – expected price, where you can place Take Profit or manually take profits, as further decline below this level is unlikely.
MACD indicator. When entering the market, it’s important to follow overbought and oversold zones.
Important. Beginner traders in the forex market should be very cautious when making decisions to enter the market. It’s best to stay out of the market before important fundamental reports to avoid being caught in sharp exchange rate fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. You need to place stop orders to lose your entire deposit quickly, especially if you do not use money management and trade with large volumes.
And remember, for successful trading, you need to have a clear trading plan, similar to the one presented above. Spontaneous trading decisions based on the current market situation are initially a losing strategy for an intraday trader.
The material has been provided by InstaForex Company – www.instaforex.com
