Analysis of Trades and Tips for Trading the British Pound

The test of the 1.2286 price level in the first half of the day coincided with the MACD indicator being significantly below the zero mark, limiting the pair's downward potential—especially after the large drop observed at the start of the European session. For this reason, I refrained from selling the pound. The anticipated purchases at 1.2231 did not materialize, as the test fell short by a few points.

Today, it is crucial to closely monitor any indications regarding the Federal Reserve's future monetary policy. If Harker and Bowman reinforce their hawkish rhetoric, this could strengthen the dollar and exert additional pressure on the pound. Apart from these speeches, the only data of note will be the US Challenger Job Cuts report, which is unlikely to generate much interest. Technically, the GBP/USD pair remains in a zone of heightened volatility, and any breakouts of key support levels could trigger new waves of selling. In the short term, it is advisable to focus on strategies aimed at further declines in the pound.

Intraday Trading Strategy

I will primarily focus on executing Scenarios #1 and #2.

Buy Signal

• Scenario #1: Plan to buy the pound at the 1.2301 level (green line on the chart) with a target at 1.2386 (thicker green line on the chart). At 1.2386, I will exit purchases and open sales in the opposite direction (anticipating a 30-35 point move in the opposite direction from the level). The pound's growth today can only be expected if the Federal Reserve adopts a dovish stance.Important! Before buying, ensure the MACD indicator is above the zero mark and beginning to rise.
• Scenario #2: Another buying opportunity arises if there are two consecutive tests of the 1.2247 level while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a reversal upwards. Expected targets are 1.2301 and 1.2386.

Sell Signal

• Scenario #1: Plan to sell the pound after breaking below the 1.2247 level (red line on the chart), which could lead to a rapid decline in the pair. The key target for sellers will be the 1.2186 level, where I will exit sales and immediately open purchases in the opposite direction (anticipating a 20-25 point move in the opposite direction from the level). Sellers are likely to dominate if the Federal Reserve maintains its hawkish stance.Important! Before selling, ensure the MACD indicator is below the zero mark and beginning to decline.
• Scenario #2: Another selling opportunity arises if there are two consecutive tests of the 1.2301 level while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a reversal downwards. Expected targets are 1.2247 and 1.2186.

Chart Details

• Thin green line: Entry price for buying the instrument.
• Thick green line: Projected price for setting Take Profit or manually securing profits, as further growth beyond this level is unlikely.
• Thin red line: Entry price for selling the instrument.
• Thick red line: Projected price for setting Take Profit or manually securing profits, as further declines beyond this level are unlikely.
• MACD Indicator: Pay attention to overbought and oversold zones when entering the market.

Important Notes

Beginner Forex traders should exercise extreme caution when making entry decisions. Before the release of major fundamental reports, it is better to stay out of the market to avoid sharp price swings. If you choose to trade during news releases, always set stop-loss orders to minimize losses. Trading without stop-loss orders could quickly deplete your deposit, especially if you do not practice proper money management and trade large volumes.

To trade successfully, it is essential to have a clear trading plan, such as the one provided above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.