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The price test at 1.3536 coincided with the MACD indicator just beginning to move upward from the zero mark, confirming a correct entry point for buying the pound. As a result, the pair rose by 20 pips.
However, the pound sterling then declined sharply, a direct consequence of heightened rumors and speculation about a potential further cut in interest rates by the Bank of England. This news placed substantial pressure on the national currency, triggering a wave of sell-offs.
Today's trading will be marked by close attention to statements from central bank officials, especially from Bank of England Monetary Policy Committee member Huw Pill. His upcoming remarks are likely to focus on potential steps toward a cut in the United Kingdom's key interest rate. This statement is crucial for market participants, as it may determine the further direction of the pound sterling's exchange rate by the end of the week and overall market expectations regarding monetary policy. Investors will closely analyze Pill's comments for signs of the BoE's willingness to ease monetary conditions. Any signals regarding imminent or more substantial-than-expected interest rate cuts could provoke a new wave of selling for the British currency, intensifying its weakness. Conversely, if Pill's comments are more cautious or suggest a longer timeframe for interest rate cuts, this could provide temporary relief for the pound and a partial recovery.
As for the intraday strategy, I will primarily rely on the implementations of Scenarios #1 and #2.
Scenario #1: Today, I plan to buy the pound at the entry point around 1.3494 (green line on the chart), with a target at 1.3512 (thicker green line on the chart). At point 1.3512, I plan to exit my long positions and open short positions in the opposite direction (expecting a movement of 30-35 pips back from the level). The pound's growth can only be anticipated after Pill's strong comments. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning an upward move.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3485 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. One could expect a rise to the opposing levels of 1.3494 and 1.3512.
Scenario #1: I plan to sell the pound today after breaking the level of 1.3485 (red line on the chart), which could lead to a quick drop in the pair. The key target for sellers will be the 1.3465 level, where I plan to exit my shorts and open longs immediately in the opposite direction (expecting a move of 20-25 pips back from the level). Pound sellers will come into play if comments are dovish. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning its downward movement.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of 1.3494 when the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a market reversal downward. One could expect a decline to the opposing levels of 1.3485 and 1.3465.
Beginner traders in the Forex market must make entry decisions very cautiously. It is best to stay out of the market before significant fundamental reports are released to avoid sudden price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
Remember, to trade successfully, you must have a clear trading plan, as presented above. Spontaneous trading decisions based on the current market situation are a losing strategy for intraday traders.
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