Analysis of Trades and Trading Tips for the British Pound
The test of the 1.3714 price 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.
The Core Personal Consumption Expenditures (PCE) index in the U.S. for May turned out only slightly above economists' forecasts, rising by 0.2%, which did not provide significant support for the dollar last Friday.
Today, traders will focus their attention on the prospects for the British economy. A downward revision of Q1 GDP would be an undesirable signal confirming a slowdown in growth. Given the Bank of England's tight monetary policy, economic weakening could limit the ability to maintain high interest rates to fight inflation, which, in turn, would negatively affect the attractiveness of the British pound.
Alongside the GDP figures, the current account balance report will also be published. A deeper trade deficit could worsen pressure on the pound, as it reflects greater demand for foreign currency to pay for imports. Investors will closely monitor these data to assess the UK economy's resilience to external shocks. The impact of macroeconomic data on the GBP/USD exchange rate will certainly depend on how far the actual figures deviate from forecasts. A significant deterioration could trigger a sharp sell-off in the pound, whereas a slight deviation may already be factored into the market's pricing.
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 1.3755 (indicated by the green line on the chart), aiming for growth toward 1.3799 (the thicker green line on the chart). Around 1.3799, I plan to exit long positions and open shorts in the opposite direction (targeting a 30–35 point move down from the level). Pound appreciation can be expected today, within the framework of the current uptrend, but only after strong economic data is released.
Important! Before buying, ensure 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 1.3720 price while the MACD indicator is in the oversold zone. This would limit the pair's downside potential and lead to an upward reversal. A rise toward the opposite levels of 1.3755 and 1.3799 can be expected.
Sell Scenario
Scenario #1: I plan to sell the pound today after the 1.3720 level is updated (red line on the chart), which should lead to a quick decline in the pair. The key target for sellers will be the 1.3664 level, where I plan to exit shorts and immediately open long positions in the opposite direction (aiming for a 20–25 point move up from the level). Selling the pound is advisable after a failed attempt to break above the daily high.
Important! Before selling, ensure the MACD indicator is below the zero mark and is just starting to decline from it.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.3755 price 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 the opposite levels of 1.3720 and 1.3664 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.
