Analysis of Trades and Trading Tips for the British Pound
The price test of 1.3322 occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair's upside potential. That's why I didn't buy the pound. A similar situation, but this time for selling, occurred after the price broke through 1.3295.
The U.S. data did not lead to a strong dollar appreciation yesterday. Investors seem to have already priced in the positive signals and are now waiting for more decisive action from the Federal Reserve. Any confirmation of a readiness to continue easing may trigger a decline in the U.S. dollar, so the lack of dollar strength despite good data is not surprising.
Today, retail sales data for March, adjusted for fuel costs, will be released in the UK. If the figures come in weaker than expected, the GBP/USD pair may resume its decline. Retail sales serve as an important indicator of consumer demand and overall economic health. A decline in retail sales may indicate economic weakness and, as a result, accelerate the Bank of England's interest rate cuts—which is negative for the British pound. The impact on GBP/USD would be direct. Weaker retail sales data could reduce demand for the pound as investors adjust their expectations for future monetary policy. This could trigger a sell-off in GBP against the U.S. dollar, pushing the GBP/USD pair lower.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the pound today at the entry point around 1.3292 (green line on the chart) with a target of 1.3329 (thicker green line). Around 1.3329, I plan to exit long positions and open shorts in the opposite direction (aiming for a 30–35 pip move in the opposite direction). A bullish continuation for the pound today is only expected after strong 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 in the event of two consecutive tests of 1.3271 when the MACD indicator is in oversold territory. This would limit the pair's downside potential and lead to a market reversal to the upside. A move toward 1.3292 and 1.3329 can be expected.
Sell Signal
Scenario #1: I plan to sell the pound today after breaking below 1.3271 (red line on the chart), which will likely lead to a sharp drop in the pair. The key target for sellers will be 1.3240, where I plan to exit short positions and immediately open long ones (aiming for a 20–25 pip reversal). Selling the pound is appropriate after weak data.
Important! Before selling, make sure the MACD indicator is below the zero line and beginning to decline.
Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of 1.3292 when the MACD indicator is in overbought territory. This would limit the pair's upside potential and lead to a reversal to the downside. A drop toward 1.3271 and 1.3240 can 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.
