Analysis of Trades and Trading Advice for the British Pound
The 1.2676 price test coincided with the MACD indicator moving far below the zero mark, which, in my opinion, limited the pair's downward potential. For this reason, I did not sell the pound. The second test of 1.2676, when the MACD was in the oversold area, provided an entry point for implementing Scenario #2 for buying, resulting in a 30+ point rise in the pair.
Data showing almost no unemployment claims in the UK for November, along with a sharp increase in average earnings, supported the British pound. However, despite the initial optimism, the economic context remains challenging.
- Persistent wage growth raises investor concerns about a potential rate hike by the Bank of England (BoE), as higher wages risk accelerating inflation, which the BoE has yet to fully control.
- Higher interest rates may slow economic growth, as the economy clearly needs stimulus and support.
In the second half of the day, focus will shift to US economic data, specifically:
- Retail Sales for November, which directly impacts inflation and the Fed's decision-making process.
- Industrial Production and Manufacturing Production figures.
Economists expect retail sales to rise by 0.6% compared to the previous month.
- Strong data would indicate robust consumer sentiment and increased inflationary pressure, supporting the US dollar.
- Weak data could trigger a recovery in GBP/USD.
For intraday strategy, I will focus on implementing Scenario #1 and Scenario #2.
Buy Signal
Scenario #1:
I plan to buy the pound when the price reaches 1.2698 (green line on the chart). Target: Growth to 1.2739 (thicker green line). At 1.2739, I will exit purchases and open short positions in the opposite direction, expecting a 30-35 point reversal. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise.
Scenario #2:
I will also plan to buy the pound if there are two consecutive tests of the 1.2671 price level when the MACD indicator is in the oversold area. This will limit the pair's downward potential and trigger a reversal upward. Expect growth toward the opposite levels of 1.2698 and 1.2739.
Sell Signal
Scenario #1:
I plan to sell the pound after breaking below the 1.2671 level (red line on the chart). Target: 1.2635, where I will exit short positions and open long positions in the opposite direction, expecting a 20-25 point reversal. Sellers will show strength only if US statistics come out strong. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to decline.
Scenario #2:
I will also plan to sell the pound if there are two consecutive tests of the 1.2698 price level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and trigger a reversal downward. Expect a decline toward the opposite levels of 1.2671 and 1.2635.
Chart Notes:
- Thin Green Line: Entry price for buying the instrument.
- Thick Green Line: Expected price to place Take Profit or manually fix profits, as further growth above this level is unlikely.
- Thin Red Line: Entry price for selling the instrument.
- Thick Red Line: Expected price to place Take Profit or manually fix profits, as further decline below this level is unlikely.
- MACD Indicator: Use overbought and oversold zones to guide market entry.
Important:
Beginner traders on the Forex market must make cautious decisions when entering trades. Before major fundamental reports are released, it is safer to stay out of the market to avoid sharp price movements.
- Always use stop-loss orders to minimize potential losses.
- Trading without stop-loss orders, especially when trading large volumes without money management, can result in rapid deposit losses.
Remember: Successful trading requires a clear trading plan. Spontaneous trading decisions based on current market movements are inherently losing strategies for intraday traders.
