Trade analysis and tips on trading the British pound

The test of the 1.3486 price occurred when the MACD indicator had already moved far below the zero mark, which limited the pair's downward potential. For this reason, I did not sell the pound and stayed without trades.

The pound resumed its decline against the U.S. dollar. The absence of sterling buyers after the release of disappointing economic data is quite natural. Investors usually avoid currencies whose economic outlook appears uncertain or worsening. Yesterday's statistics likely indicated a slowdown in UK economic growth, heightening recession fears. Today's lack of data only "added fuel to the fire."

During the U.S. session, fairly interesting data on new home sales and a speech by FOMC member Mary Daly are expected. Growing problems in the U.S. housing market could negatively affect the dollar's bullish outlook against the pound. Weakness in the housing sector, especially in the primary market, may trigger a chain reaction affecting related industries such as construction, building materials, and even the financial sector, which in turn could hurt overall economic activity. In the context of high inflation, any signs of slowing U.S. growth may undermine investor confidence in the strength of the U.S. currency. The importance of Daly's speech lies in her direct influence on monetary policy decisions. Her comments on the housing market, inflation expectations, and the outlook for further rate cuts will directly impact market sentiment.

As for intraday strategy, I will rely mainly on Scenarios No. 1 and No. 2.

Buy signal

Scenario No. 1: Today, I plan to buy the pound at an entry point around 1.3486 (green line on the chart), targeting 1.3520 (thicker green line on the chart). Around 1.3520, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 point reversal from the level). Strong growth in the pound can be expected only after weak U.S. data. Important! Before buying, make sure the MACD indicator is above the zero mark and just starting to rise from it.

Scenario No. 2: I also plan to buy the pound today in the case of two consecutive tests of 1.3467 when the MACD is in the oversold area. This will limit the pair's downward potential and trigger a reversal upward. Growth can be expected toward the opposite levels of 1.3486 and 1.3520.

Sell signal

Scenario No. 1: I plan to sell the pound after it breaks below 1.3467 (red line on the chart), which should lead to a quick decline in the pair. The key target for sellers will be 1.3434, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 point reversal from the level). The pound could drop sharply in the second half of the day after strong U.S. data. Important! Before selling, make sure the MACD indicator is below the zero mark and just starting to decline from it.

Scenario No. 2: I also plan to sell the pound today in the case of two consecutive tests of 1.3486 when the MACD is in the overbought area. This will limit the pair's upward potential and trigger a reversal downward. A decline can be expected toward the opposite levels of 1.3467 and 1.3434.

What's on the chart:

• Thin green line – entry price for buying the instrument;
• Thick green line – estimated price for setting Take Profit or fixing profit manually, as further growth above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – estimated price for setting Take Profit or fixing profit manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to use overbought and oversold zones as guidance.

Important: Beginner forex traders must be very cautious when making entry decisions. Before the release of major fundamental reports, it is best to stay out of the market to avoid sharp swings in price. 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 ignore money management and trade with large volumes.

And remember, successful trading requires a clear trading plan, like the one I have outlined above. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.