Trade Analysis and Recommendations for the British Pound

The price test at 1.2654 occurred when the MACD indicator had already moved significantly below the zero mark, which limited the pair's downward potential. For this reason, I refrained from selling the pound.

Comments from Bank of England officials failed to support further pound appreciation today, and a sudden shift away from risk assets in favor of the U.S. dollar wiped out the morning gains that had initially looked promising.

With no significant economic releases from the U.S., market attention is likely to shift toward the technical outlook for GBP/USD. The pound showed resilience despite its decline during the European session, and expectations for further upside are supported by a relatively weak U.S. dollar, which remains under pressure due to ongoing uncertainty over Federal Reserve monetary policy. Traders should also watch for potential speeches from Bank of England officials, which could influence market sentiment. However, until further developments emerge, technical factors will likely play the dominant role in GBP/USD price movements.

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

Buy Signal

Scenario #1: Buying the pound is advisable when the price reaches the 1.2645 level, with an upward target at 1.2684. At 1.2684, I plan to exit long positions and consider selling in the opposite direction, anticipating a 30-35 point pullback. Any upward movement in the pound today is likely to remain within a limited range. Before entering a long position, ensure that the MACD indicator is above the zero mark and beginning to rise.

Scenario #2: Another opportunity to buy the pound arises if the price tests 1.2621 twice, while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger an upward reversal, with an expected rise toward 1.2645 and 1.2684.

Sell Signal

Scenario #1: Selling the pound is viable after a break below 1.2621, which would likely lead to a rapid decline. The key downward target is 1.2590, where I plan to exit short positions and consider buying in the opposite direction for a 20-25 point correction. Sellers will likely take advantage of the lack of fundamental data to drive the market lower. Before entering a short position, ensure that MACD is below the zero mark and beginning to decline.

Scenario #2: Another selling opportunity arises if the price tests 1.2645 twice, while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a downward reversal, with an expected decline toward 1.2621 and 1.2590.

Key Chart Levels

• Thin green line: Entry price for buying the instrument.
• Thick green line: Estimated price for setting Take Profit or manually securing profits, as further growth above this level is unlikely.
• Thin red line: Entry price for selling the instrument.
• Thick red line: Estimated price for setting Take Profit or manually securing profits, as further decline below this level is unlikely.

The MACD indicator plays a crucial role in trade execution, with traders needing to monitor overbought and oversold conditions before entering positions.

Important Considerations for Beginner Forex Traders

It is essential to exercise caution when entering the market, especially before high-impact fundamental reports. The best approach is to stay out of the market during news releases to avoid sharp price fluctuations.

If you decide to trade during major economic announcements, always use stop-loss orders to limit potential losses. Without proper risk management, trading large volumes without stop-loss protection can quickly wipe out an account.

For consistent trading success, having a clear and structured trading plan is critical. Following a disciplined approach, like the one outlined above, will help maintain control over market decisions. Making impulsive trades based on short-term price movements is a losing strategy for intraday traders.