Analysis of Trades and Trading Tips for the British Pound

The 1.2373 price test occurred when the MACD indicator had just started moving upward from the zero mark, confirming a valid buying entry point for the pound. This led to a rise toward the target level of 1.2413. Selling on the rebound from that level allowed for an additional 15 pips of profit.

Despite clear support for further interest rate cuts in the UK, statements from British policymakers resulted in a rise in the pound. In the latter half of the day, buying activity increased further, even in light of Federal Reserve Chair Jerome Powell's warning to approach rate cuts cautiously in the U.S. This paradox highlights the complexity of the current macroeconomic environment, where national policies can influence markets in unexpected ways, despite overarching global trends. The market may be assessing the relative resilience of the UK economy or interpreting these statements as indications of more decisive measures than previously anticipated. The increased demand for the pound may also reflect expectations of more aggressive monetary easing, which could attract capital inflows. Investors might have viewed Powell's remarks as confirmation of the Fed's cautious stance, making the British pound a relatively more attractive asset.

Today, in the absence of major macroeconomic drivers, even the slightest remark from a central bank official could significantly impact investor sentiment. The market will closely watch Megan Greene's speech, looking for clues about the future direction of monetary policy. Greene is expected to address inflation, economic growth prospects, and the future of interest rates, all of which could affect the pound's movement.

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

Buy Signal

Scenario #1: I plan to buy GBP/USD at 1.2453 (green line on the chart), targeting an increase to 1.2495 (thicker green line on the chart). At 1.2495, I will exit long positions and immediately initiate a sell trade in the opposite direction, aiming for a 30–35 pip pullback. The uptrend is expected to continue. Important! Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise.

Scenario #2: Another buying opportunity arises if GBP/USD tests 1.2435 twice in succession, with MACD in the oversold zone. This would limit the pair's downside potential, triggering an upward market reversal. Expected upside targets: 1.2453 and 1.2495.

Sell Signal

Scenario #1: I plan to sell GBP/USD after a breakout below 1.2435 (red line on the chart), which could lead to a sharp decline. The main target for sellers is 1.2399, where I will exit short positions and immediately buy on the rebound, aiming for a 20–25 pip pullback. Selling GBP/USD at higher levels is preferred. Important! Before selling, ensure that the MACD indicator is below the zero mark and beginning to decline.

Scenario #2: I will also sell GBP/USD if the price tests 1.2453 twice in succession, with MACD in the overbought zone. This would limit the pair's upside potential, leading to a downward reversal. Expected downside targets: 1.2435 and 1.2399.

Chart Notes

• Thin green line: Entry price for buying the trading instrument.
• Thick green line: A suggested target for Take Profit or manually locking in profits, as further growth above this level is unlikely.
• Thin red line: Entry price for selling the trading instrument.
• Thick red line: A suggested target for Take Profit or manually locking in profits, as further decline below this level is unlikely.
• MACD Indicator: Critical for identifying overbought and oversold zones to guide market entry decisions.

Important Note for Beginner Traders

• Always approach market entry decisions cautiously.
• Avoid trading during major news releases to sidestep volatile price swings.
• If trading during news releases, always set stop-loss orders to minimize losses.
• Trading without stop-loss orders or money management practices can quickly deplete your deposit, especially when using large volumes.
• A clear trading plan, like the one outlined above, is essential for successful trading. Spontaneous trading decisions based on current market conditions are inherently disadvantageous for intraday traders.