Analysis of Trades and Trading Tips for the British Pound

The price test at 1.2989 came when the MACD indicator had already moved significantly from the zero mark, limiting the pair's upward potential. For this reason, I did not buy the pound. I did not find any other entry points into the market either.

The rise of GBP/USD to its monthly peak yesterday was triggered by disappointing U.S. retail sales data. Retail sales data in the U.S. came in worse than expected, signaling growing difficulties in the American economy under the Trump administration. Traders quickly reacted, continuing to sell the dollar and shifting to more risky assets, particularly the British pound.

At the same time, it is important to consider the factors affecting the pound itself. The Bank of England's tough stance on inflation suggests that the central bank will pause the rate-cutting cycle at the next meeting, meaning the pound's rise could continue. However, considering how recently overbought the pair has been, even a minimal trigger could lead to a significant drop. So, caution is advised for long positions.

No new data from the UK is available today, so the pound may attempt to update weekly highs.

For intraday strategy, I will primarily rely on Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today when the price reaches around 1.2983 (green line) with a target growth of 1.3021 (thicker green line on the chart). At 1.3021, I plan to exit the buy position and immediately sell in the opposite direction, expecting a 30-35 pip move back down from that level. The pound can be expected to rise as part of the ongoing uptrend. Important! Before buying, ensure the MACD indicator is above the zero mark and beginning to rise.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.2969 while the MACD indicator is in the oversold zone. This will limit the pair's downside potential and lead to a market reversal upward. We can expect growth to the opposite levels of 1.2983 and 1.3021.

Sell Signal

Scenario #1: I plan to sell the pound today after the 1.2969 level is broken (red line on the chart), which will lead to a quick decline of the pair. The key target for sellers will be 1.2930, where I plan to exit the sell position and immediately buy in the opposite direction, expecting a 20-25 pip move back up from that level. It's best to sell the pound as high as possible. Important! Before selling, ensure that the MACD indicator is below the zero mark and beginning to decline.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.2893 price level while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a market reversal downward. We can expect a decrease to the opposite levels of 1.2969 and 1.2930.

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.