Trade Review and Advice on Trading the British Pound

During the first half of the day, a test of 1.2627 occurred when the MACD indicator had just started moving downward from the zero mark, confirming a valid sell entry for the pound, which resulted in a 20-point decline.

In the second half of the day, traders should focus on the S&P/Case-Shiller Home Price Index for the 20 largest US cities and the Richmond Fed Manufacturing Index. While these indicators are not key economic drivers, they may cause short-term fluctuations in the market. It is important to note that market reactions to these reports can be unpredictable, so waiting for the initial market response before entering a trade is the best approach. However, statements from Trump's administration and the White House regarding new tariffs will have a much greater impact than these economic reports. Additionally, FOMC member Michael S. Barr is scheduled to speak today, and his typically dovish stance could further weaken the dollar.

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

Buy Signal

Scenario #1: I plan to buy the pound at 1.2666 (green line on the chart) with a target of 1.2687. At 1.2687, I will exit the trade and consider selling the pound for a 30-35 point retracement. Today's bullish trend suggests further upward potential for GBP/USD.Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning to rise.

Scenario #2: Another buying opportunity arises if the price tests 1.2637 twice, while the MACD indicator is in oversold territory. This setup would limit downward potential and trigger a rebound, with targets at 1.2666 and 1.2687.

Sell Signal

Scenario #1: I plan to sell the pound after breaking below 1.2637 (red line on the chart), which could lead to a quick decline in the pair. The key target for sellers is 1.2613, where I will exit the trade and immediately buy for a 20-25 point rebound. Sellers will gain momentum after updating daily highs, but their strength will depend on US economic data.Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to decline.

Scenario #2: I will also consider selling the pound if the price tests 1.2666 twice, while the MACD indicator is in overbought territory. This setup would limit the upward potential and lead to a reversal downward, with expected targets at 1.2637 and 1.2613.

Chart Explanation

• Thin green line – Entry price for buying the trading instrument.
• Thick green line – Take Profit level, where further price growth is unlikely.
• Thin red line – Entry price for selling the trading instrument.
• Thick red line – Take Profit level, where further price decline is unlikely.
• MACD Indicator – When entering the market, it is crucial to consider overbought and oversold conditions.

Important Notes for Beginner Forex Traders

Caution is essential when making trading decisions. Before major economic reports, it is often best to stay out of the market to avoid sudden price swings. If you choose to trade during news events, always use stop-loss orders to minimize risks. Trading without proper risk management can quickly deplete your entire account, especially when using high leverage.

For consistent success, a clear trading plan is crucial—similar to the one outlined above. Making spontaneous trading decisions based on market fluctuations is a losing strategy for intraday traders.