Trade Analysis and Tips for Trading the British Pound

The test of the price at 1.3513 coincided with the moment when the MACD indicator was just starting to move down from the zero mark, confirming it as a good selling entry point for the pound. As a result, the pair decreased by 20 pips.

Despite the escalation of geopolitical tensions in the Middle East, evidenced by Iran's seizure of several commercial vessels in the Strait of Hormuz, the British pound sterling has shown surprisingly high resilience. This is likely related to recent inflation data that came in above economists' forecasts, or the markets may have largely priced in the risks associated with the Middle Eastern conflict, believing that the direct impact on the British economy will be limited.

In anticipation of important macroeconomic data from the United Kingdom, traders are again showing caution. Market participants, including traders and analysts, will be particularly focused on upcoming releases of business activity indicators. These include the manufacturing PMI, the services PMI, and their composite, which reflects the overall state of the economy. These indices are considered among the earliest and key indicators of economic activity for the reporting month, based on surveys of purchasing managers that reflect their assessments of current economic conditions, production volumes, new orders, employment levels, and price trends. Positive results exceeding forecasts could indicate accelerated economic growth in the UK, which, in turn, could influence the Bank of England's future actions.

If the published indices fall short of expectations or signal a slowdown, this could raise concerns about the British economy's outlook, further pressuring the pound.

Regarding the intraday strategy, I will primarily rely on the realization of scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today when the price reaches around 1.3497 (green line on the chart), with a target price of 1.3512 (thicker green line on the chart). At around 1.3512, I plan to exit the market and open sell positions in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from this level). Growth in the pound today can only be anticipated after very strong UK data. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning its upward movement from there.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3486 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and may lead to an upward market reversal. An increase can be expected at the opposite levels of 1.3497 and 1.3512.

Sell Signal

Scenario #1: I plan to sell the pound today after it drops below 1.3486 (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the 1.3457 level, where I will exit the short positions and also open immediate long positions in the opposite direction (expecting a 20-25-pip move in the opposite direction from this level). Pressure on the pound today will return with a tough stance from the US and Iran. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning its downward movement.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of 1.3497 while the MACD indicator is in the overbought area. This will limit the pair's upward potential and may lead to a market reversal downward. A decrease can be expected toward the opposite levels of 1.3486 and 1.3457.

What Is On The Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the expected price where Take Profit can be set, or profits can be secured, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the expected price where Take Profit can be set, or profits can be secured, as further decline below this level is unlikely;
• MACD Indicator. It is important to be guided by overbought and oversold zones upon entering the market.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to be out of the market before important fundamental reports are released to avoid being caught in sharp price fluctuations. If you choose 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 large volumes.

And remember, for successful trading, it is essential to have a clear trading plan, like the one presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.