Analysis of Trades and Tips for Trading the British Pound

The test of the price level at 1.3055 coincided with the MACD indicator beginning its downward movement from the zero mark, confirming the correct entry point for selling the pound further down the trend. As a result, the pair declined toward the target level of 1.3015.

The pound collapsed after the likelihood of another tax increase by the UK government increased. Yesterday, UK Prime Minister Keir Starmer stated that such a decision would be fair within the context of the expected new budget for next year. This news instantly sparked a wave of concern among investors accustomed to the unstable economic environment in the country. The market's reaction was swift. The British pound sharply fell against major currencies, signaling a lack of confidence in the prospects of the British economy amid increased tax burdens. Companies are worried that rising taxes will stifle economic growth and reduce their competitiveness on the international stage. The expectations for the new budget have turned into a heavy blow for the British currency. Investors seem unprepared for new financial initiatives, viewing them as factors that exacerbate an already challenging economic situation. Moreover, Keir Starmer's statements only added fuel to the fire, making the prospect of tax increases almost inevitable.

Today promises to be significant for assessing the state of the British economy, as the PMI data for the UK services sector in October, as well as the composite PMI index, are expected to be published. These indicators are key metrics reflecting sentiment in the business environment and the overall state of the country's economy. The services sector PMI, in particular, is of special significance, as it constitutes a considerable portion of the British economy. Values above 50 points indicate growth in this sector, while values below 50 points signify contraction. The composite PMI index, in turn, combines data from both the services and manufacturing sectors, providing a more comprehensive view of the UK's economic situation. Investors and analysts closely monitor these indicators to assess economic growth prospects and to determine the direction of future monetary policy by the Bank of England.

Regarding the intraday strategy, I will rely more on the implementation of Scenarios #1 and #2.

Buy Scenarios

Scenario #1: I plan to buy pounds today upon reaching an entry point around 1.3038 (green line on the chart), targeting a move to 1.3066 (thicker green line on the chart). At the level of 1.3066, I intend to exit the market and open a sell position in the opposite direction (anticipating a movement of 30-35 pips in the opposite direction from the level). Growth in the pound today can only be expected within the framework of a correction. Important: Before buying, ensure that the MACD indicator is above the zero mark and just starting its upward movement from there.

Scenario #2: I also plan to buy pounds today in the event of two consecutive tests of the price 1.3015 while the MACD indicator is in the oversold zone. This will limit the pair's downside potential and lead to an upward market reversal. An increase can be expected toward the opposite levels of 1.3038 and 1.3066.

Sell Scenarios

Scenario #1: I plan to sell pounds today after the 1.3015 level is breached (red line on the chart), leading to a rapid decline in the pair. The key target for sellers will be the level of 1.2983, where I plan to exit the market and immediately buy in the opposite direction (anticipating a movement of 20-25 pips in the opposite direction from the level). Sellers of the pound could return to the market at any moment. Important: Before selling, ensure that the MACD indicator is below the zero mark and just starting its downward movement from there.

Scenario #2: I also plan to sell pounds today in the event of two consecutive tests of the price 1.3038 while the MACD indicator is in the overbought zone. This will limit the upward potential of the pair and lead to a market reversal downward. A decrease can be expected toward the opposite levels of 1.3015 and 1.2983.

What the Chart Shows:

• Thin Green Line: Entry price for buying the trading instrument.
• Thick Green Line: Estimated price where Take Profit can be set or where profit can be secured, as further increases above this level are unlikely.
• Thin Red Line: Entry price for selling the trading instrument.
• Thick Red Line: Estimated price where Take Profit can be set or where profit can be secured, as further decreases below this level are unlikely.
• MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.

Important: Beginner traders in the Forex market must be very cautious when making trading entry decisions. It is best to remain out of the market before the release of important fundamental reports to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade with large volumes.

And remember that successful trading requires having a clear trading plan, similar to the one I presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.