Analysis of Trades and Advice for Trading the British Pound

The first test of the 1.2603 level occurred when the MACD indicator had already moved significantly above the zero line, which, in my view, limited the pair's upward potential, especially following yesterday's sell-off. For this reason, I did not buy the pound and missed the entire morning move.

The pound's rally ahead of the Bank of England's rate decision raised many questions. Personally, I anticipated low market volatility due to the uncertainty surrounding the UK's economic indicators and the regulator's next steps. However, as this instance demonstrated, the market is capable of unexpected movements. Regardless, it's crucial to remember that short-term market moves can be deceptive.

In the afternoon, traders should be prepared for any changes in the Bank of England's policy and closely examine US economic data. Reports on initial jobless claims, GDP changes, existing home sales, and the Philadelphia Fed Manufacturing Index are expected. Strong US data could pressure the pound further.

For intraday strategies, I will focus on implementing Scenario #1 and Scenario #2.

Buy Signal

Scenario #1: Today, I plan to buy the pound at 1.2660 (green line on the chart), targeting a rise to 1.2690 (thicker green line on the chart). At 1.2690, I plan to exit my long positions and open short positions, expecting a retracement of 30–35 points from this level. Sterling's rally today will depend on weak US data.Important! Before buying, ensure the MACD is above the zero line and just beginning to rise.

Scenario #2: I also plan to buy the pound after two consecutive tests of 1.2635, with the MACD in the oversold zone. This will limit the pair's downward potential and prompt a reversal upward. Growth toward 1.2660 and 1.2690 is expected.

Sell Signal

Scenario #1: I plan to sell the pound after it breaks below 1.2635 (red line on the chart), targeting a decline to 1.2608. At 1.2608, I plan to exit short positions and immediately buy back the pound, expecting a retracement of 20–25 points. Sellers will likely act following strong US data.Important! Before selling, ensure the MACD is below the zero line and just beginning to decline.

Scenario #2: I also plan to sell the pound after two consecutive tests of 1.2660, with the MACD in the overbought zone. This will limit the pair's upward potential and lead to a reversal downward. A decline toward 1.2635 and 1.2608 is expected.

Chart Details

• Thin green line: Entry price for buying the instrument.
• Thick green line: Target price for Take Profit or manual closure, as further growth above this level is unlikely.
• Thin red line: Entry price for selling the instrument.
• Thick red line: Target price for Take Profit or manual closure, as further decline below this level is unlikely.
• MACD Indicator: Use overbought and oversold zones as a guide for market entry.

Important Notes

Beginner Forex traders should approach market entry decisions with great caution. Before the release of key fundamental reports, it's best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always set stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you fail to manage risk and trade with large volumes.

Remember, successful trading requires a clear plan, like the one outlined above. Making spontaneous decisions based on the current market situation is an inherently losing strategy for intraday traders.