Analysis of Trades and Trading Tips for the British Pound

The test of the 1.3425 price level coincided with the moment when the MACD indicator had just begun moving upward from the zero line, confirming the correct entry point for buying the pound. As a result, the pair rose by more than 80 points.

During his speech in Jackson Hole, Federal Reserve Chair Jerome Powell made it clear that he intends to lower interest rates in September this year. The reaction of the currency markets was immediate. Investors, anticipating reduced returns on dollar-denominated assets, began to reallocate their portfolios toward more attractive currencies such as the British pound. The pound, which was already showing relative stability amid the absence of new economic challenges, received an additional boost. The Fed's rate cut appears to be part of a broader strategy aimed at stimulating economic growth in the U.S. However, this step also carries certain risks. Dollar depreciation could increase import costs, fueling inflation. Moreover, it could pressure other central banks into adopting similar measures.

Today, in the first half of the day, no data are scheduled in the UK, so demand for the pound will likely remain, especially after the Fed's dovish stance. The weakening of the dollar opens up new opportunities for other currencies, with sterling among the first to benefit. However, despite the lack of significant economic reports this morning, sustained growth still requires fundamental factors supporting optimism toward the British currency.

For intraday strategy, I will focus primarily on Scenarios #1 and #2.

Buy Scenario

Scenario No. 1: Today, I plan to buy the pound at the entry point around 1.3520 (green line on the chart) with a target of 1.3560 (thicker green line on the chart). At 1.3560, I plan to exit long positions and immediately open shorts in the opposite direction (expecting a 30–35 point pullback from the level). Buying the pound today can be considered as part of the continuation of the new upward trend. Important! Before buying, ensure 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 if there are two consecutive tests of the 1.3504 price level at the moment when the MACD indicator is in oversold territory. This will limit the pair's downside potential and trigger a reversal upward. Growth toward the opposite levels of 1.3520 and 1.3560 can be expected.

Sell Scenario

Scenario No. 1: Today, I plan to sell the pound after it breaks below the 1.3504 level (red line on the chart), which will trigger a quick decline in the pair. The key target for sellers will be 1.3461, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 point rebound from the level). Sellers of the pound will act cautiously today. Important! Before selling, ensure the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of the 1.3520 price level at the moment when the MACD indicator is in overbought territory. This will limit the pair's upside potential and trigger a reversal downward. A decline toward the opposite levels of 1.3504 and 1.3461 can be expected.

What's on the Chart:

• The thin green line represents the entry price where the trading instrument can be bought.
• The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
• The thin red line represents the entry price where the trading instrument can be sold.
• The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
• The MACD indicator should be used to assess overbought and oversold zones when entering the market.

Important Notes:

• Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
• Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.