Trade Review and Tips for Trading the British Pound
The test of the 1.3383 price level occurred just as the MACD indicator was beginning to move downward from the zero line, confirming a valid entry point for selling the pound. As a result, the pair declined by just 15 points.
UK data came in stronger than expected, and pressure on the pound eased quickly. The Composite Business Activity Index for October rose to 53.1 from 52.0 in the previous month. More importantly, new orders increased at their fastest pace since September 2024, while employment grew for the first time in two years.
The second half of the day could prove challenging for the pound, as US economic data may allow the dollar to regain the initiative. Preliminary US PMI figures for October are expected today. The forecast for the manufacturing sector stands at 55.5, while the services sector is expected to reach 58.0. The Composite PMI stood at 58.4 in the previous reading. Any reading above 50 indicates expansion, and the US figures are nearly eight points higher than their UK counterparts. This illustrates the significant divergence between the performance of the two economies.
The University of Michigan's consumer sentiment index will be released next, with a forecast of 46.3, unchanged from the previous reading. Inflation expectations are also expected to remain unchanged at 4.7% and 3.5%, respectively.
These figures are important for the Federal Reserve because excessively high inflation expectations strengthen the case for further interest rate increases, thereby pushing yields and the US dollar higher.
As for the intraday trading strategy, greater emphasis will be placed on Scenarios No. 1 and No. 2.
Buy Signal
Scenario No. 1: The plan is to buy the pound today if the price reaches the entry level around 1.3383 (the thin green line on the chart), with an upward target of 1.3416 (the thick green line on the chart). Near 1.3416, the plan is to close the long position and open a short position in the opposite direction, targeting a move of 30–35 points from that level. A rise in the pound today can only be expected if US data are weaker than anticipated. Important: Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario No. 2: The pound can also be bought today if the price tests 1.3370 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger an upward market reversal. The upward targets are 1.3383 and 1.3416.
Sell Signal
Scenario No. 1: The plan is to sell the pound today after the price breaks below 1.3370 (the red line on the chart), which would trigger a rapid decline in the pair. The key target for sellers is 1.3346, where the plan is to close the short position and immediately open a long position in the opposite direction, targeting a rebound of 20–25 points from that level. Strong selling pressure on the pound could return if the situation in the Middle East deteriorates. Important: Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.
Scenario No. 2: The pound can also be sold today if the price tests 1.3383 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a downward market reversal. The downward targets are 1.3370 and 1.3346.
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 at which Take Profit can be set or profits can be closed manually, as further gains above this level are considered unlikely.
- Thin red line — the entry price at which the trading instrument can be sold.
- Thick red line — the projected price level at which Take Profit can be set or profits can be closed manually, as further declines below this level are considered unlikely.
- MACD indicator — when entering the market, it is important to consider overbought and oversold zones.
Important: Beginner Forex traders should exercise great caution when deciding whether to enter the market. Before the release of major fundamental reports, it is generally best to stay out of the market to avoid exposure to sharp exchange-rate fluctuations. If trading during news releases, always use stop-loss orders to minimize potential losses. Without stop-loss orders, the entire trading account can be depleted very quickly, especially when large position sizes are used without proper money management.
Remember that successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based on current market conditions is a fundamentally flawed strategy for an intraday trader.
