Analysis of Trades and Tips for Trading the British Pound

The test of the 1.2223 price level during the first half of the day occurred when the MACD indicator was just beginning to rise from the zero mark, confirming a proper entry point for buying the pound. As a result, the pair rose by only 10 points before demand for the pound subsided.

Pound sellers are not particularly active, likely because yesterday's rumors regarding U.S. tariffs discouraged selling at current lows. However, such a situation cannot persist indefinitely. If the tariff rumors fade without confirmation, sellers may return to the market, resuming the downward trend. Traders should also consider macroeconomic indicators, which can impact the pound's exchange rate. While signs of significant economic growth in the UK could shift traders' strategies, this scenario seems unlikely at present.

Today, the U.S. Producer Price Index (PPI) data is expected, which may show stable growth and strengthen traders' expectations of the Federal Reserve's continued hawkish stance on interest rates. Core PPI, excluding volatile components, might also exceed forecasts, highlighting the resilience of inflationary pressures. These factors create favorable conditions for U.S. dollar buyers.

Buy Signal

Scenario #1: Plan to buy the pound today at the 1.2201 level (green line on the chart) with a target of 1.2270 (thicker green line on the chart). Around 1.2270, I will exit the purchases and open sales in the opposite direction, expecting a 30-35 point pullback from the level. The pound's growth today is likely to be limited to a small correction.Important: Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario #2: Plan to buy the pound if there are two consecutive tests of the 1.2160 level, with the MACD indicator in the oversold zone. This will limit the pair's downward potential and lead to an upward market reversal. Expect growth toward the opposite levels of 1.2201 and 1.2270.

Sell Signal

Scenario #1: Plan to sell the pound after the 1.2160 level (red line on the chart) is updated, leading to a rapid decline. Sellers' main target will be the 1.2117 level, where I will exit sales and immediately open purchases in anticipation of a 20-25 point upward movement from the level. Sellers may emerge at any moment to continue the trend.Important: Before selling, ensure that the MACD indicator is below the zero mark and just starting to fall from it.

Scenario #2: Plan to sell the pound if there are two consecutive tests of the 1.2201 level, with the MACD indicator in the overbought zone. This will limit the pair's upward potential and lead to a downward market reversal. Expect a decline toward the opposite levels of 1.2160 and 1.2117.

Chart Guide

• Thin green line: Entry price for buying the trading instrument.
• Thick green line: Estimated price for setting Take Profit or manually taking profit, as further growth above this level is unlikely.
• Thin red line: Entry price for selling the trading instrument.
• Thick red line: Estimated price for setting Take Profit or manually taking profit, as further declines below this level are unlikely.
• MACD Indicator: Key for determining entry points, focusing on overbought and oversold zones.

Important Notes for Beginner Forex Traders

• Exercise caution when making market entry decisions.
• Avoid trading during the release of key economic reports to mitigate the risk of sharp price swings.
• Always set stop-loss orders to minimize losses. Without stop-losses, you risk quickly losing your entire deposit, especially when trading large volumes without proper money management.
• Successful trading requires a clear plan, like the one presented above. Impulsive trading decisions based on current market conditions are inherently losing strategies for intraday traders.