Trade Analysis and Recommendations for Trading the British Pound
The test of the 1.3204 price occurred when the MACD indicator was just starting to move downward from the zero line, which confirmed the correct entry point for selling the pound. As a result, the pair fell by more than 20 points.
After news of the third consecutive month of rising housing prices in the UK, the pound showed a slight strengthening, but it was not enough to restore bullish optimism. In the second half of the day, the RCM/TIPP U.S. Economic Optimism Index will be released. FOMC member Michelle Bowman will also deliver a speech. Only very strong statistics will bring pressure back on the pound against the U.S. dollar. The RCM/TIPP Index, known for its accuracy in forecasting economic trends, will be a key indicator of consumer and business sentiment today. Optimistic readings could push the Fed toward a more cautious stance, which in turn would strengthen the U.S. dollar. Bowman's speech is also of significant interest. Investors will carefully analyze her comments for any hints of potential changes in monetary policy. Any statements suggesting a softening of the Fed's position could put considerable pressure on the dollar.
For intraday strategy, I will mainly rely on the implementation of scenarios No. 1 and No. 2.
Buy Signal
Scenario No. 1: Today, I plan to buy the pound when the price reaches the entry point around 1.3206 (green line on the chart), with a target at 1.3250 (thicker green line on the chart). Around 1.3250, I will exit long positions and open sell trades in the opposite direction, expecting a 30–35 point move from that level. Strong pound growth today can only be expected after weak U.S. data. Important! Before buying, make sure the MACD indicator is above the zero line and just start its upward movement from it.
Scenario No. 2: I also plan to buy the pound today if the price tests 1.3177 twice while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 1.3206 and 1.3250 can be expected.
Sell Signal
Scenario No. 1: I plan to sell the pound after the price breaks 1.3177 (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers is 1.3140, where I will exit shorts and immediately open long positions (expecting a 20–25 point rebound). Pressure on the pound is unlikely to return today.Important! Before selling, make sure the MACD indicator is below the zero line and just beginning its downward movement.
Scenario No. 2: I also plan to sell the pound today if the price tests 1.3206 twice while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.3177 and 1.3140 can be expected.
Chart Legend:
- Thin green line – entry price for buying the instrument
- Thick green line – expected price for Take Profit or manually taking profit, as further growth above this level is unlikely
- Thin red line – entry price for selling the instrument
- Thick red line – expected price for Take Profit or manually taking profit, as further decline below this level is unlikely
- MACD indicator – when entering the market, it is important to use overbought and oversold zones as guidance
Important:Beginner Forex traders must exercise great caution when deciding to enter the market. Before the release of major fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can quickly lose your entire deposit, especially if you do not use money management and trade with large volumes.
Remember, successful trading requires a clear trading plan, like the one presented above. Making spontaneous trading decisions based solely on the current market situation is inherently a losing strategy for intraday traders.
