Trade Review and Tips for Trading the British Pound
The price test at 1.3211 occurred after the MACD indicator had already moved well below the zero line, limiting the pair's downside potential. For that reason, I did not sell the pound. The second test of 1.3211 triggered a buy scenario, which resulted in a 15-pip advance.
The dollar largely ignored the mixed US new-home sales report for August: activity rose 6.4% month-on-month to a 684k annualized pace, but the median sale price plunged 9.1% to $478,700. A similar ambiguity appeared in labor-market data: initial jobless claims fell to 197k, and the four-week average declined to 202,250, while continuing claims edged up slightly to 1.719 million. I believe this mixed picture kept the dollar from gaining a clear advantage, since neither report gave the market enough to revise Federal Reserve-rate expectations. For the pound, such a pause is more neutral than positive, because GBP/USD already lacks strong catalysts after weak retail data.
The key event in the first half of the day for the pound will be a speech by Bank of England Governor Andrew Bailey, from whom the market expects signals on the future rate path. But having recently left the rate at 3.75%, I do not expect a sharp change in tone today. More interesting was yesterday's speech by Deputy Governor Clare Lombardelli, who warned that policy is increasingly likely to require tightening if high energy prices persist and disinflation is not evident. Her remarks came amid another jump in oil prices. That oil dynamic ties directly to Lombardelli's logic about accumulating second-round effects. If Bailey takes a similar stance, the pound could recover.
For intraday strategy, I will mainly rely on executing No. 1 and No. 2 scenarios.
Buy Scenarios
No 1: I plan to buy the pound today around the 1.3240 entry area (green line on the chart), targeting 1.3274 (thicker green line on the chart). Around 1.3274, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip counter-move). Expect pound gains today only after a hawkish Bailey. Important: before buying, ensure the MACD is above zero and has just begun rising.
No 2: I also plan to buy the pound if the price tests 1.3211 twice in a row while MACD is in the oversold area. This would limit the pair's downside potential and lead to an upward reversal. Expect moves to 1.3240 and 1.3274.
Sell Scenarios
No 1: I plan to sell the pound after the 1.3211 level is breached (red line on the chart), which should lead to a rapid decline. The sellers' key target will be 1.3186, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip counter-move). Bad news will restore pressure on the pound. Important: before selling, ensure the MACD is below zero and has just begun falling.
No 2: I also plan to sell the pound if the price tests 1.3240 twice in a row while MACD is in the overbought area. This would limit upside potential and trigger a reversal downward. Expect declines toward 1.3211 and 1.3186.
What to Look for on the Chart:
- Thin Green Line – Entry price at which you can buy the trading instrument;
- Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
- Thin Red Line – Entry price at which you can sell the trading instrument;
- Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
- MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.
Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp 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 employ money management practices and trade large volumes.
Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.
