Analysis of Trades and Trading Tips for the British Pound

The price test at 1.2950 occurred when the MACD indicator had already moved significantly above the zero mark, which limited the pair's upward potential. For this reason, I didn't buy the pound and stayed out of trades in the second half of the day.

After positive GDP data, the pound regained some strength at the end of last week, which helped limit the pair's downside potential. Weak U.S. data also helped traders ease the pressure. Unfortunately, UK GDP in the first quarter is expected to show even more modest growth, which may pressure the pound. Declining inflation—a key factor shaping the Bank of England's dovish monetary policy—supports this view.

Today during the European session, the UK will publish data on the number of mortgage approvals, net lending to individuals, and the change in the M4 money supply aggregate. While these figures help gauge the domestic health of the British economy, they are unlikely to significantly impact overall FX market dynamics, including the pound. Investors will likely focus on more significant macroeconomic drivers such as inflation, interest rates, and the geopolitical landscape.

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

Buy Signal

Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.2965 (green line on the chart), targeting a rise to 1.3018 (thicker green line). Around 1.3018, I plan to exit long positions and open shorts in the opposite direction (expecting a move of 30–35 pips in the opposite direction). Pound growth should only be expected after strong economic data. Important: Before buying, ensure the MACD indicator is above the zero line and beginning to rise.

Scenario #2: I also plan to buy the pound today if the price tests 1.2935 twice consecutively while MACD is in oversold territory. This would limit the pair's downside potential and trigger a reversal to the upside. A rise toward the opposite levels, 1.2965 and 1.3018, may be expected.

Sell Signal

Scenario #1: I plan to sell the pound today after breaking below 1.2935 (red line on the chart), which would lead to a quick decline. The key target for sellers will be 1.2885, where I intend to exit short positions and open long positions in the opposite direction (expecting a 20–25 pip bounce). Selling the pound is best done from higher levels. Important: Before selling, ensure the MACD indicator is below the zero line and just beginning to decline.

Scenario #2: I also plan to sell the pound today in case of two consecutive tests of 1.2965 while MACD is in overbought territory. This would limit the pair's upside potential and trigger a downward reversal. A decline toward the opposite levels, 1.2935 and 1.2885, may be expected.

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.