Trade Review and Tips for Trading the British Pound

The first test of the 1.2313 level occurred when the MACD indicator had already moved significantly above the zero line, clearly limiting the pair's upward potential. For this reason, I did not buy the pound. A second test of 1.2313 followed shortly after, with the MACD in the overbought zone, triggering Scenario #2 for selling, which resulted in a 25-point drop in the pound.

Despite stable UK PMI data, economic growth expectations remain modest. Investors are cautious due to the uncertainty surrounding global economic challenges following the recent U.S.-driven trade war. The pound could remain under pressure unless there are additional signs of positive trends in the manufacturing sector.

In the short term, key factors influencing the GBP/USD exchange rate will be the U.S. ISM manufacturing index data. If the results are worse than expected, it could indicate a slowdown in U.S. economic growth. Such news typically leads to a decline in the dollar, opening the door for a correction in GBP/USD, as investors might consider long positions in anticipation of a pound recovery. However, hopes for pound strengthening may prove illusory if the market perceives the data as temporary fluctuations. Conversely, stronger ISM data could add pressure on GBP/USD. A market driven by optimistic economic forecasts will likely support the dollar, pushing the pound back under pressure.

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

Buy Signal

Scenario #1: I plan to buy the pound today upon reaching the 1.2322 entry point (green line on the chart) with a target of 1.2367 (thicker green line on the chart). At 1.2367, I will exit the buy position and sell in the opposite direction, aiming for a 30-35 point retracement from the entry point. Pound strength today is only expected after weak U.S. data.Important! Before buying, ensure the MACD indicator is above the zero line and just starting to rise from it.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.2298 level while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a market reversal upward. Expect growth towards 1.2322 and 1.2367.

Sell Signal

Scenario #1: I plan to sell the pound today after it breaks below 1.2298 (red line on the chart), leading to a rapid decline. The primary target for sellers will be 1.2253, where I will exit the sell position and buy in the opposite direction (20-25 point rebound expected). Sellers will likely become active in the event of strong U.S. data.Important! Before selling, ensure the MACD indicator is below the zero line and just starting to decline from it.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.2322 level while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a market reversal downward. Expect a decline towards 1.2298 and 1.2253.

Chart Indicators Explanation:

• Thin green line – Entry price for buying the trading instrument.
• Thick green line – Take Profit level or suggested price for locking in profits, as further growth above this level is unlikely.
• Thin red line – Entry price for selling the trading instrument.
• Thick red line – Take Profit level or suggested price for locking in profits, as further declines below this level are unlikely.
• MACD Indicator – It's important to follow overbought and oversold zones when entering trades.

Important Notes for Beginner Forex Traders:

• Exercise caution when making market entry decisions. It's advisable to stay out of the market before the release of key fundamental reports to avoid sudden price swings.
• If you decide to trade during news releases, always set stop-loss orders to minimize losses. Without stop-losses, you could quickly lose your entire deposit, especially if you're not using proper money management and trading with large volumes.
• Remember: For successful trading, you need a clear trading plan, like the one outlined above. Spontaneous trading decisions based on current market conditions are inherently a losing strategy for intraday traders.