Trade Analysis and Tips for the British Pound
The test at 1.3290 coincided with the moment when the MACD indicator was just beginning to move upward from the zero mark, confirming an appropriate entry point for buying the pound. As a result, the pair rose by 20 pips.
Increased uncertainty surrounding the Federal Reserve’s future policy has led traders in the pound to adopt a more cautious stance. Amid uncertainty about whether the Fed will lean towards tightening or pausing, and given the geopolitical situation’s potential to shift at any moment, market participants prefer not to open large positions and wait for clearer signals. In this environment, the GBP/USD pair is likely to trade cautiously, avoiding sharp movements until clarity emerges. As long as the market lacks clarity on the Fed’s stance or developments in the Middle East, the British currency will remain in a narrow range, with market sentiment around the dollar being the primary guide.
Regarding data, in the first half of the day, traders and analysts will focus on three key indicators: the number of approved mortgage applications, the volume of net lending to individuals, and changes in the M4 money supply. While these figures may seem specialized, they significantly influence the overall state of the British economy and, consequently, the exchange rate of the national currency.
Particularly important are the data on approved mortgage loans. This indicator directly reflects activity in the real estate market, which, in turn, is one of the drivers of consumer confidence and spending. The volume of net lending to individuals is also important as it provides insight into how actively the population is using credit for their needs, whether for purchasing durable goods, cars, or other large acquisitions.
The change in the M4 money supply is also closely monitored. M4 is a broad measure of the money supply in the economy, including cash, demand deposits, and various types of savings accounts. An increase in M4 may indicate an expansion of liquidity in the system, which, all else being equal, typically supports inflation and stimulates economic activity. Only very strong indicators will help the pound with a new wave of growth against the dollar.
In terms of intraday strategy, I will primarily rely on implementing scenarios #1 and #2.
Buying Scenarios
Scenario #1: I plan to buy the pound today upon reaching an entry point around 1.3303 (green line on the chart), with a target for growth to 1.3321 (thicker green line on the chart). At 1.3321, I plan to exit long positions and open short positions in the opposite direction (expecting a move of 30-35 pips in the opposite direction from the level). Growth for the pound can only be expected after strong data. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just starting to rise from there.
Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the price 1.3284 when the MACD indicator is in the oversold area. This will limit the pair’s downward potential and lead to an upward market reversal. A rise to the opposite levels of 1.3303 and 1.3321 can be expected.
Selling Scenarios
Scenario #1: I plan to sell the pound today after the level of 1.3284 is updated (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be 1.3277, where I intend to exit shorts and immediately buy in the opposite direction (expecting a move of 20-25 pips in the opposite direction from the level). Bad news will bring pressure back on the pound. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from there.
Scenario #2: I also plan to sell the pound today in the case of two consecutive tests of the price 1.3303 when the MACD indicator is in the overbought area. This will limit the pair’s upside potential and lead to a market reversal downwards. A decline to the opposite levels of 1.3284 and 1.3277 can be expected.
What’s on the Chart:
- Thin green line – entry price for buying the trading instrument;
- Thick green line – estimated price for placing Take Profit or manually securing profits, as further growth above this level is unlikely;
- Thin red line – entry price for selling the trading instrument;
- Thick red line – estimated price for placing Take Profit or manually securing profits, as further decline below this level is unlikely;
- MACD Indicator. When entering the market, it is important to be guided by the zones of overbought and oversold.
Important: New traders in the Forex market should make decisions about market entry very cautiously. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp fluctuations in the exchange rate. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade with large volumes.
And remember, for successful trading, it is essential to have a clear trading plan, like the one outlined above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.
