Analysis of Trades and Trading Tips for the British Pound

The price test at 1.2437 occurred when the MACD indicator had already moved significantly above the zero mark, limiting the pair's further upward potential. For this reason, I decided against buying the pound. Similarly, the price test at 1.2404 happened when the MACD was well below the zero mark, which restricted the pair's downward potential.

Weak U.S. labor market data significantly impacted currency pairs, particularly GBP/USD. The data fell short of analysts' expectations, undermining confidence in the U.S. economy and the dollar. As a result, the British pound managed to strengthen, recovering losses observed earlier in the week.

Today, important data is expected from the UK. If the PMI index exceeds analysts' expectations, it could boost positive market sentiment and increase demand for the pound. The market will closely monitor details in the reports, including data on new orders and employment, as these can provide insight into the state of the British economy. Sustained growth in the services sector would give the Bank of England strong reasons to adopt a less aggressive stance on interest rate cuts, which would also attract more investor interest in the pound.

On the other hand, if the figures fall below forecasts, it could heighten negative sentiment and put pressure on the sterling.

I will primarily rely on the execution of Scenarios #1 and #2 for today's trading plan.

Buy Signal

Scenario #1: I plan to buy the pound today upon reaching the entry point at 1.2501 (green line on the chart), targeting a rise to 1.2549 (thicker green line on the chart). At 1.2549, I plan to exit long positions and initiate short trades, aiming for a 30-35 pip pullback from the entry point. A bullish outlook for the pound is viable after strong economic data. Important: Before buying, ensure the MACD indicator is above the zero line and just beginning to rise.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.2459 level while the MACD is in oversold territory. This will limit the pair's downward potential and lead to a market reversal to the upside. Expected targets are 1.2501 and 1.2549.

Sell Signal

Scenario #1: I plan to sell the pound today after the price breaks below 1.2459 (red line on the chart), which will lead to a sharp decline in the pair. The key target for sellers will be 1.2400, where I plan to exit short positions and immediately open long positions for a 20-25 pip rebound from the entry point. It's better to sell the pound from as high a level as possible. Important: Before selling, ensure the MACD indicator is below the zero line and beginning to decline.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.2501 level while the MACD is in overbought territory. This will limit the pair's upward potential and lead to a market reversal to the downside. Expected targets are 1.2459 and 1.2400.

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.