Trade Analysis and Tips for Trading the British Pound

The test of the price at 1.2666 occurred as the MACD indicator began moving below the zero line, confirming a correct entry point for selling the pound within the bearish trend. This resulted in a sharp drop of over 40 points. Expectations that Bank of England Governor Andrew Bailey will signal a more dovish monetary policy during today's parliamentary hearings are increasing pressure on the pound, which has been struggling to gain traction. Amid uncertainty from domestic and external economic factors, investors are cautious about potential changes in the central bank's strategies, particularly concerning inflation and growth management.

At the same time, a dovish policy may be necessary to support the slowing UK economy, though it risks further devaluation of the pound, potentially leading to a larger decline. For intraday strategy, I will focus on implementing scenarios #1 and #2.

Buy Signal

Scenario #1:I plan to buy the pound today if the price reaches around 1.2656 (green line on the chart), targeting a rise to 1.2683 (thicker green line on the chart). At 1.2683, I will exit the market and immediately sell the pound back, aiming for a 30-35 point move in the opposite direction. Strong growth in the pound today is likely only if Bailey adopts a hawkish stance.Note: Before buying, ensure the MACD indicator is above the zero line and just starting to move upward.

Scenario #2:I also plan to buy the pound today if the price tests 1.2628 twice, with the MACD indicator in the oversold zone. This would limit the pair's downward potential and trigger an upward market reversal. Expected targets are resistance levels at 1.2656 and 1.2683.

Sell Signal

Scenario #1:I plan to sell the pound today after the price breaks below 1.2628 (red line on the chart), targeting a quick drop to 1.2599. At this level, I will exit and immediately buy back, aiming for a 20-25 point move in the opposite direction. Sellers are expected to remain active within the downward trend.Note: Before selling, ensure the MACD indicator is below the zero line and starting its downward move.

Scenario #2:I also plan to sell the pound today if the price tests 1.2656 twice, with the MACD indicator in the overbought zone. This would limit the pair's upward potential and trigger a downward market reversal. Expected targets are support levels at 1.2628 and 1.2599.

Chart Key Points

• Thin green line: Entry price for buying.
• Thick green line: Target price for locking in profits; further growth beyond this level is unlikely.
• Thin red line: Entry price for selling.
• Thick red line: Target price for locking in profits; further decline below this level is unlikely.
• MACD indicator: Use the overbought and oversold zones as a guide when entering trades.

Important: Beginner Forex traders should approach market entry decisions with caution. Avoid trading during the release of major fundamental reports to minimize exposure to sharp price fluctuations. If you choose to trade during news events, always set stop orders to limit potential losses. Without stop orders, you could quickly lose your entire deposit. This risk is especially high if you trade large volumes without a proper money management strategy.

Finally, always trade with a clear plan, such as the one outlined above. Spontaneous trading decisions based on the current market situation are often a losing strategy for intraday traders.