Trade review and tips for trading the British pound
A price test at 1.3320 occurred as the MACD indicator began moving down from the zero line, confirming a valid entry point to sell the pound. As a result, the pair fell about 25 pips.
US housing-market data (NAHB) was weak, but I wouldn't attribute the dollar's brief move at the time solely to that print—the timing was likely coincidental. The NAHB index fell 3 points to 29 in October. Current sales slipped 2 points to 33, six-month sales expectations fell 5 points to 32, and buyer traffic dropped 5 points to 18. Those details indicate expensive mortgages are weighing on demand. NAHB is a secondary series and usually has limited impact on FX, so the pound's drop against the dollar that day was temporary.
This morning the UK calendar focuses on labour-market data: initial jobless claims, the unemployment rate, and average earnings. Claims show how many people are seeking benefits, the unemployment rate shows the overall employment situation, and wages indicate how fast incomes are rising. I view average earnings as the key release because wages feed directly into inflation: higher pay boosts spending and enables companies to pass costs into prices, especially in services. The Bank of England's rate is 3.75%, and the Bank watches wage growth closely for signs of a wage-price spiral. Recent data showed unemployment at 4.9%, and private-sector regular pay (ex bonuses) rose 2.8% — the lowest in several years. A disappointment across the trio could quickly push the pound lower; strong prints would give GBP/USD room to rise. I expect an immediate reaction at publication that will help set the tone for the rest of the European session.
For intraday strategy, I will mainly rely on Scenarios 1 and 2.
Buy scenarios
Scenario 1: Buy the pound near 1.3340 (green line), targeting 1.3368 (thicker green line). Exit long positions at 1.3368 and consider opening short positions there, targeting a 30–35 pip retracement. Expect pound gains today as a continuation of the trend. Important: before buying, make sure MACD is above zero and just beginning to rise.
Scenario 2: Also consider buying if price tests 1.3320 twice while MACD is in the oversold area. That would limit downside potential and trigger a reversal higher. Expect moves to 1.3340 and 1.3368.
Sell scenarios
Scenario 1: Sell the pound after a break below 1.3320 (red line). That should lead to a rapid decline. Sellers' target is 1.3293, where I will exit shorts and open longs (aiming for a 20–25 pip reversal). Bad news would restore pressure on the pound. Important: before selling, make sure MACD is below zero and just beginning to fall.
Scenario 2: Also consider selling if price tests 1.3340 twice while MACD is in the overbought area. That would limit upside potential and trigger a downward reversal. Expect declines toward 1.3320 and 1.3293.
What's on the chart:
Thin green line — entry price where you can buy the instrument.
Thick green line — approximate price where you can place Take Profit or manually lock in profits, because further upside above this level is unlikely.
Thin red line — entry price where you can sell the instrument.
Thick red line — approximate price where you can place Take Profit or manually lock in profits, because further downside below this level is unlikely.
MACD indicator. When entering the market, it's important to consider overbought and oversold zones.
Important. Novice Forex traders must be very cautious when deciding to enter the market. It is best to stay out before major fundamental reports to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.
Remember: successful trading requires a clear trading plan, like the example above. Spontaneous trade decisions based solely on the immediate market situation are, by definition, a losing strategy for an intraday trader.
