Trade Review and Recommendations for the British Pound

The first test of 1.2429 occurred when the MACD indicator had already moved significantly above zero, limiting the pair's upside potential. For this reason, I did not buy GBP/USD.

A second test of 1.2429 happened later when MACD was in the overbought zone, triggering Scenario #2 for selling. This led to a 30-point decline in GBP/USD, confirming the effectiveness of the setup.

The market remains under pressure, and for bulls to regain control, they need a strong breakout above 1.2430. Sellers are clearly dominant, as seen in the increasing trading volume around current price levels.

Additionally, U.S. economic data should not be underestimated. Reports on inflation and consumer spending could significantly influence the Federal Reserve's decision-making process, ultimately affecting the U.S. dollar's strength.

If U.S. economic data beats expectations, GBP/USD could face additional pressure. Weak U.S. Core PCE Price Index data, combined with dovish rhetoric from FOMC member Michelle Bowman, could weaken the dollar and support GBP/USD.

A soft stance on interest rates could lead to increased investor demand for the pound, making GBP/USD a more attractive asset in the short term.

Intraday Trading Strategy: Focus on Scenarios #1 and #2

Buy Signal

Scenario #1: Buy GBP/USD at 1.2430 (green line on the chart) targeting 1.2475 (thicker green line on the chart). At 1.2475, I will exit the long position and sell GBP/USD, expecting a 30–35 point pullback. Bullish momentum depends on weak U.S. data.

Important! Before buying, confirm that MACD is above zero and beginning to rise.

Scenario #2: Buy GBP/USD after two consecutive tests of 1.2402, provided that MACD is in the oversold zone. This setup will limit the downward potential and could trigger a bullish reversal. Expected target levels for this scenario: 1.2430 and 1.2475.

Sell Signal

Scenario #1: Sell GBP/USD after a break below 1.2402 (red line on the chart), targeting 1.2372. At 1.2372, I will exit short positions and buy GBP/USD, expecting a 20–25 point retracement. Bearish momentum could strengthen following strong U.S. data.

Important! Before selling, confirm that MACD is below zero and beginning to decline.

Scenario #2: Sell GBP/USD after two consecutive tests of 1.2430, provided that MACD is in the overbought zone. This setup will limit upward potential and could trigger a bearish reversal. Expected downside targets: 1.2402 and 1.2372.

Chart Explanation

• Thin green line – Entry price for buying.
• Thick green line – Take Profit level or target where further upside is unlikely.
• Thin red line – Entry price for selling.
• Thick red line – Take Profit level or target where further downside is unlikely.
• MACD Indicator – Overbought and oversold zones should be monitored before entering a trade.

Important Notes for Beginner Forex Traders

• Exercise caution when entering trades, especially before major economic reports.
• Avoid trading before key U.S. data releases to prevent getting caught in high volatility.
• Always use stop-loss orders to minimize potential losses, especially when trading large volumes.
• Without stop-loss protection, you risk losing your deposit quickly.
• A structured trading plan is essential—like the one presented above.
• Spontaneous trading decisions based on short-term market movements are a losing strategy for intraday traders.