Trade analysis and tips for trading the British pound
The test of the price at 1.2195 occurred at a moment when the MACD indicator had just started moving downward from the zero mark, confirming the correct entry point for selling the pound in anticipation of weak data on service sector activity. However, after a 10-point drop, demand returned, limiting the downward potential. In the second half of the day, all attention will be focused on an important report on the US labor market, which will determine the pair's further direction. An increase in the number of non-farm payrolls will surely push the trading instrument down, limiting the upward correction of the British pound. If the data indicate a sharp increase in labor market problems and the ISM Non-Manufacturing Purchasing Managers' Index drops more than economists' forecasts, the dollar is expected to weaken, leading to an upward movement of the pair. As for intraday prospects, I will act based on the implementation of scenario #1.
Buy Signal
Scenario #1: Today, you can buy the pound when the entry point reaches around 1.2221 (green line on the chart) with a target of 1.2275 (thicker green line on the chart). At around 1.2275, I recommend exiting purchases and opening sales in the opposite direction, expecting a 30-35-point movement in the opposite direction from the level. The pound's rise can be expected only after weak US labor market data. Important! Before buying, make sure that the MACD indicator is above the zero mark and has just started rising from it.
Scenario #2: You can also buy the pound today in the event of two consecutive price tests at 1.2195 when the MACD indicator is in the oversold area. This will limit the downward potential of the pair and lead to a reversal of the market upward. Expect an increase to the opposite levels of 1.2221 and 1.2275.
Sell Signal
Scenario #1: Selling the pound today can only be done after the level of 1.2195 is updated (red line on the chart), which will lead to a rapid decline in the pair. Sellers' key target will be 1.2142, where I recommend exiting sales and immediately opening purchases in the opposite direction, expecting a 20–25 point movement in the opposite direction from the level. Pressure on the pound will increase in the event of another increase in new jobs, exceeding economists' forecasts similar to the September indicator. Important! Before selling, make sure that the MACD indicator is below the zero mark and has just started its decline from it.
Scenario #2: You can also sell the pound today in the event of two consecutive price tests at 1.2221 when the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a market reversal downward. Expect a decrease to the opposite levels of 1.2195 and 1.2142.
On the chart:
Thin green line - entry price for buying the trading instrument.
Thick green line - the expected price where you can place Take Profit or independently fix profits, as further growth above this level is unlikely.
Thin red line - entry price for selling the trading instrument.
Thick red line - the expected price where you can place Take Profit or independently fix profits, as further decline below this level is unlikely.
MACD indicator. When entering the market, it is important to consider overbought and oversold zones.
Important. Novice traders in the forex market should be very cautious when making trading decisions. It is better to stay out of the market before the release of important fundamental reports to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always use stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not use proper money management and trade with large volumes.
And remember that for successful trading, you need to have a clear trading plan, similar to the one I have presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.