Trade Analysis and Recommendations for the British Pound

The test of 1.2601 occurred just as the MACD indicator began moving upward from the zero mark, confirming a valid buy entry and leading to a 20-point increase.

Buyers of the British pound have returned to the market, taking advantage of morning declines to levels considered attractive for long-term positions. This surge in buyer activity was also supported by improving sentiment in global markets, as concerns over new U.S. tariffs slightly subsided. However, the sustainability of this rally remains uncertain. The UK's economic instability and the Bank of England's expected rate cuts will continue to limit the pound's upward potential.

In the second half of the day, traders will focus on U.S. initial jobless claims and the Philadelphia Fed Manufacturing Index. Additionally, speeches by FOMC members Austan D. Goolsbee and Michael S. Barr could influence market sentiment. Investors are eager for U.S. data, hoping for more clarity on the Federal Reserve's policy direction. A decline in jobless claims could strengthen the dollar, whereas a weak Philadelphia Fed index might pressure the U.S. currency. The speeches by Goolsbee and Barr are expected to hint at future Fed actions, adding volatility to the markets.

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

Buy Signal

Scenario #1: Buying GBP/USD is possible at 1.2623 (green line on the chart), targeting 1.2643. At 1.2643, I plan to exit long positions and sell GBP/USD in anticipation of a 30-35 point correction. Expecting further pound appreciation today depends on weak U.S. data. Important! Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise.

Scenario #2: I also plan to buy GBP/USD if the pair tests 1.2603 twice, while the MACD is in oversold territory. This should limit the pair's downward potential and trigger a market reversal upward. The expected targets will be 1.2623 and 1.2643.

Sell Signal

Scenario #1: Selling GBP/USD is advisable after reaching 1.2603 (red line on the chart), which could trigger a rapid decline. The key target for sellers will be 1.2585, where I plan to exit short positions and buy the pound in anticipation of a 20-25 point correction. Sellers will likely re-enter the market if the Fed maintains a hawkish stance. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline.

Scenario #2: I also plan to sell GBP/USD if the pair tests 1.2623 twice, while the MACD is in overbought territory. This will limit the upward potential and lead to a reversal downward. Expected targets will be 1.2603 and 1.2585.

Chart Key:

• Thin green line: Entry price for buying.
• Thick green line: Target for Take Profit (TP) or manual exit, as further growth beyond this level is unlikely.
• Thin red line: Entry price for selling.
• Thick red line: Target for Take Profit (TP) or manual exit, as further decline beyond this level is unlikely.
• MACD Indicator: Used for entry confirmation, considering overbought and oversold zones.

Important Note for Beginner Traders

Beginner traders in the Forex market should be cautious when making trade entry decisions. Before major economic reports, it is best to stay out of the market to avoid sharp price fluctuations.

If you choose to trade during news releases, always set stop-loss orders to minimize potential losses. Without stop-loss protection, you risk losing your entire deposit quickly, especially if you trade large volumes without risk management.

For successful trading, it is essential to follow a structured trading plan, like the one outlined above. Random trade decisions based on current market sentiment often result in losses, making it an ineffective strategy for intraday traders.