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The test of the price at 1.3585 coincided with the moment when the MACD indicator was just starting to move below the zero mark, confirming a valid entry point for selling the pound. As a result, the pair dropped by more than 100 pips.
Weak UK labor market data released yesterday triggered a noticeable decline in the national currency's value. Investors and analysts were concerned that the data suggested a slowdown in job growth and possibly an impending recession, which put direct pressure on the British pound. Key indicators, such as the increase in unemployment benefit claims and the slowdown in wage growth, came in worse than expected. These figures present a troubling picture for the British economy, which is already facing several challenges, including high inflation and political uncertainty.
Today, pressure on the pair may persist. If the consumer price index shows a sharp decrease, this will indicate a reduction in inflationary pressure, which in turn may prompt the Bank of England to adopt a softer monetary policy. A similar impact will come from a decline in retail sales indices. If the British start spending less, it could signal a weakening of consumer demand, which is not a positive sign for the economy and, consequently, for the British pound. Producer price index (PPI) data will provide insights into how much raw materials and components are increasing in price. If this indicator begins to decline, it may suggest a forthcoming reduction in inflation of end products.
Regarding my intraday strategy, I will rely more on implementing Scenarios 1 and 2.
Scenario 1: I plan to buy the pound today upon reaching an entry point around 1.3565 (green line on the chart) with a target growth to the level of 1.3585 (thicker green line on the chart). At the level of 1.3585, I will exit from the long position and open shorts in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). Growth in the pound today can only be anticipated after good data. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise from it.
Scenario 2: I also plan to buy the pound today if the price tests 1.3552 twice in a row, when the MACD indicator is in the oversold area. This will limit the downward potential of the pair and lead to a market reversal upwards. Growth can be expected towards the opposite levels of 1.3565 and 1.3585.
Scenario 1: I plan to sell the pound today after breaking the level of 1.3552 (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 1.3534 level, where I plan to exit the short position and immediately buy in the opposite direction (expecting a 20-25-pip move in the opposite direction from the level). Sellers of the pound will show themselves when data is poor. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline from it.
Scenario 2: I also plan to sell the pound today if the price tests 1.3565 twice in a row while the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a market reversal downwards. A decline can be expected towards the opposite levels of 1.3552 and 1.3534.
The thin green line represents the entry price at which one can buy the trading instrument;
The thick green line represents the approximate price where one can set Take Profit or secure profits, as further growth above this level is unlikely;
The thin red line represents the entry price at which one can sell the trading instrument;
The thick red line represents the approximate price where one can set Take Profit or secure profits, as further decline below this level is unlikely;
The MACD indicator: when entering the market, it is important to consider overbought and oversold zones.
Important: Beginner traders in the Forex market should be very careful when making entry decisions. It is best to stay out of the market before important fundamental reports are released to avoid getting caught in sharp price fluctuations. 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 large volumes.
And remember, for successful trading, it is essential to have a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.
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