Trade Analysis and Recommendations for the British Pound

The 1.2435 price test occurred when the MACD indicator had just started moving upward from the zero mark, confirming a valid entry point for buying the pound, which resulted in a 30+ point increase in the pair.

During the European session, the British pound showed resilience and continued to rise, partially recovering from the sharp drop triggered by yesterday's Bank of England rate cut. Expectations of upcoming economic data also play a crucial role in supporting GBP/USD's bullish momentum.

However, more critical statistics lie ahead, which could disrupt the plans of risk-asset buyers. U.S. Nonfarm Payrolls (NFP) is one of the key indicators of economic health, reflecting labor market activity. An increase in employment in this sector may indicate economic recovery and rising consumer demand. The unemployment rate is equally significant, as low unemployment often leads to higher wages and stronger consumer spending. The University of Michigan Consumer Sentiment Index will provide insights into public perception of economic conditions. Higher optimism signals positive economic momentum, while weak data could trigger market uncertainty. Inflation expectations will also shape sentiment. If inflation forecasts exceed expectations, it could trigger pound selling and boost demand for the U.S. dollar.

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

Buy Signal

Scenario #1: Buy GBP/USD at 1.2467 (green line) with a target of 1.2513. At 1.2513, I will exit long positions and consider selling for a 30-35 point pullback. A bullish move is likely only after weak U.S. data.

Important! Before buying, ensure that the MACD indicator is above zero and just starting to rise.

Scenario #2: Buy GBP/USD after two consecutive tests of 1.2439 if the MACD indicator is in the oversold zone. This will limit downward potential and likely trigger a reversal upward. Target levels: 1.2467 and 1.2513.

Sell Signal

Scenario #1: Sell GBP/USD after it breaks below 1.2439 (red line), triggering a sharp decline with a target level of 1.2392, where I will exit shorts and consider a reversal buy (for a 20-25 point retracement). Selling pressure could increase if U.S. data is strong.

Important! Before selling, ensure that the MACD indicator is below zero and just starting to decline.

Scenario #2: Sell GBP/USD after two consecutive tests of 1.2467, if the MACD indicator is in the overbought zone. This would limit the upward potential and signal a market reversal downward. Target levels: 1.2439 and 1.2392.

Chart Explanation

• Thin green line: Entry price for long trades.
• Thick green line: Take profit level (growth beyond this level is unlikely).
• Thin red line: Entry price for short trades.
• Thick red line: Take profit level (further downside is unlikely).
• MACD Indicator: Key signal for overbought and oversold conditions.

Important Notes for Beginner Traders

Exercise caution when making trading decisions. Avoid entering positions before major economic reports to prevent getting caught in sharp price fluctuations. If you trade during news events, always use stop-loss orders to minimize potential losses.

Trading without stop-loss orders can result in rapid capital depletion, especially when trading large volumes without proper risk management. A well-structured trading plan is essential—random impulsive trades based on short-term market movements are a losing strategy for intraday traders.