Analysis of Trades and Trading Tips for the British Pound

The price test at 1.2875 occurred when the MACD indicator moved significantly below the zero line, limiting the pair's downside potential. For this reason, I did not sell the pound and stayed out of trades.

News of declining inflation in the UK and Donald Trump's introduction of 25% tariffs on car imports to the U.S. weakened the pound. Though the measure was framed as beneficial for American industry and job creation, it faced broad condemnation from the international community due to concerns about its negative effects on the global economy. This created pressure on all risk assets, pulling the pound down as well.

Today, in the first half of the day, we expect a speech by Bank of England MPC member Swati Dhingra. Traders will pay close attention to her remarks on the current state of the UK economy and the future of monetary policy, especially since there are no other economic releases from the UK today. Dhingra is expected to comment on the BoE's assessment of inflationary pressure, growth prospects, and possible future steps amid ongoing uncertainty. The market will analyze every word for hints on potential rate changes in light of yesterday's inflation slowdown.

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 1.2929 (green line on the chart) with a target of 1.2961 (thicker green line on the chart). Around 1.2961, I plan to exit long positions and open shorts in the opposite direction (expecting a pullback of 30–35 pips from the level). Important: Before buying, ensure the MACD indicator is above the zero line and starting to rise.

Scenario #2: I also plan to buy the pound if the price tests 1.2905 twice a row while the MACD is in the oversold zone. This would limit the downside potential and may lead to an upward market reversal. Targets: 1.2929 and 1.2961.

Sell Signal

Scenario #1: I plan to sell the pound today after a breakout below 1.2905 (red line on the chart), which may lead to a sharp drop. The main target for sellers is 1.2875, where I plan to exit short positions and immediately open long positions in the opposite direction (expecting a pullback of 20–25 pips from the level). It's best to sell the pound at higher levels. Important: Before selling, ensure the MACD indicator is below the zero line and beginning to fall from it.

Scenario #2: I plan to sell the pound today if the price tests 1.2929 twice a row while the MACD is in the overbought zone. This would limit the upside potential and may lead to a reversal downward. Targets: 1.2905 and 1.2875.

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.