Review of Trades and Trading Tips for the British Pound
The test of 1.3260 occurred when the MACD indicator was just beginning to move upward from the zero line, confirming the validity of the entry point for a long position in the pound. However, the trade resulted in a loss. Selling at 1.3243 when the MACD began to move downward allowed for a profit of around 30 points.
The pound declined today, although the economic data initially appeared positive. The final reading of the UK's manufacturing PMI for September came in below the preliminary estimate. According to S&P Global, the PMI formally rose to 51.9 from 51.7 in August, and the sector has now been expanding for eleven consecutive months. However, traders primarily focus on whether the final release matched the previously reported flash estimate, and a weaker final reading is generally perceived as a signal of less strong momentum than the market had priced in.
The second half of the day for the pound will be driven by external data. The US ISM Manufacturing PMI and subsequent comments from Federal Reserve officials will be in focus. The situation surrounding the manufacturing PMI itself appears relatively predictable, and the market does not expect a major surprise. The more important developments will come afterward: FOMC members Jeffrey Schmid and Susan Collins will speak, and traders will look for new signals regarding interest rates in their remarks. For GBP/USD, this means that the direction of the pair will be determined not by UK data but primarily by the market's interpretation of US signals. I believe that a dovish tone from the speakers could give the pound an opportunity to recover, while any indications of concern about inflation could quickly put renewed pressure on the pair.
As for the intraday strategy, I will focus more on the implementation of Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound when the entry point is reached around 1.3216 (the green line on the chart), with a target of 1.3261 (the thicker green line on the chart). Around 1.3261, I will close the long position and open a short position in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pound today can be expected only following very weak US data. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario #2: I also plan to buy the pound today if the price tests 1.3189 twice consecutively while the MACD indicator is in the oversold zone. This should limit the pair's downward potential and lead to an upward reversal. A rise toward the opposite levels of 1.3216 and 1.3261 can be expected.
Sell Signal
Scenario #1: Today, I plan to sell the pound after the price breaks below 1.3189 (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3153, where I will close the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Strong pressure on the pound will return following strong US data. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.
Scenario #2: I also plan to sell the pound today if the price tests 1.3216 twice consecutively while the MACD indicator is in the overbought zone. This should limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.3189 and 1.3153 can be expected.
What the Chart Shows
- Thin green line — the entry price at which the trading instrument can be bought;
- Thick green line — the projected price level where Take Profit orders can be placed or profits can be taken manually, as further growth above this level is considered unlikely;
- Thin red line — the entry price at which the trading instrument can be sold;
- Thick red line — the projected price level where Take Profit orders can be placed or profits can be taken manually, as further decline below this level is considered unlikely;
- MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.
Important. Beginner Forex traders should exercise great caution when making decisions about entering the market. Before the release of important fundamental reports, it is generally best to remain out of the market to avoid exposure to sharp price fluctuations. If you decide to trade during news releases, always use stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large position sizes.
And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.
