Trade Review and Tips for Trading the British Pound
The price test at 1.3421 occurred as the MACD indicator began moving down from the zero line, confirming a good entry point to sell the pound. As a result, the pair fell toward the target area of 1.3400.
The pound dropped against the dollar after several Federal Reserve officials spoke more hawkishly about inflation and rates. As the data showed, the US consumer-price index excluding food and energy rose 0.3% versus a 0.2% forecast, and the headline rose 0.4% versus a 0.3% forecast. The market responded by buying the dollar.
With no UK data releases today, the chances of a pound recovery in the first half of the day are minimal, and traders will focus on recent Bank of England remarks and the latest data. The November 5 decision was hawkish — the rate was raised to 4.00%. Nevertheless, the pound then fell versus the dollar because the move was already priced in, and Bailey only indicated that a second hike is more likely than not but would depend on energy prices returning to previous levels. Later, on November 9, Bailey spoke in Zurich about trade and openness but did not touch rates. This resembles October 14, when his remarks on social media offered no rate guidance and GBP/USD moved into a correction. Without hawkish language from the governor, nothing supports the pound, and yesterday's data added no optimism. Against this backdrop, the dollar, which rose about 0.5% after US inflation, remains stronger than the pound, and I believe the pair will stay under pressure through the end of the European session.
For intraday strategy, I will mainly rely on the implementation of scenarios No. 1 and No. 2.
Scenarios to Buy
Scenario No. 1: I plan to buy the pound today when the entry point around 1.3345 (green line on the chart) is reached, targeting a move to 1.3368 (thicker green line on the chart). Around 1.3368, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move away from the level). Expect today's pound rise only as a corrective move. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3324 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. You can expect a rise to the opposite levels of 1.3345 and 1.3368.
Scenarios to Sell
Scenario No. 1: I plan to sell the pound today after the 1.3324 level is broken (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers is 1.3298, where I will exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move away from the level). Bad news will restore pressure on the pound. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to fall from it.
Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of 1.3345 while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. You can expect a decline to the opposite levels of 1.3324 and 1.3298.
What's on the Chart:
Thin green line – the entry price at which you can buy the trading instrument;
Thick green line – the suggested price where you can place a Take Profit or manually lock in gains, since further upside above this level is unlikely;
Thin red line – the entry price at which you can sell the trading instrument;
Thick red line – the suggested price where you can place a Take Profit or manually lock in gains, since further downside below this level is unlikely;
MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.
Important. Beginner Forex traders must be very cautious when making entry decisions. Before the release of important fundamental reports, it is best to stay out of the market 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 I presented above. Spontaneous trading decisions based on the current market situation are a losing strategy for an intraday trader from the start.
