Analysis of Trades and Trading Tips for the British Pound

The test of the 1.3564 price level occurred at a time when the MACD indicator was starting to move down from the zero mark, which confirmed the correct entry point for selling the pound and resulted in a 10-point drop.

Yesterday's dovish stance from U.S. Federal Reserve officials allowed GBP/USD to continue its upward movement. This trend is supported not only by the dollar's internal weakness but also by optimism about the prospects of the UK economy, although the risks of recession and inflationary pressure remain significant.

However, today may become a turning point for the British pound. Investors' attention is focused on the upcoming release of key economic indicators that will shed light on the state of the UK economy and influence the dynamics of the GBP/USD pair. Of particular importance is the release of GDP data. This indicator, reflecting the total value of goods and services produced, serves as a gauge of the country's economic health. A moderate increase is forecast, but any deviation from expectations could have a significant impact on the currency market. Improved figures will strengthen the pound, while weaker data could lead to its decline. Also important is the report on changes in industrial production. As a driver of the economy, the industrial sector is sensitive to changes in consumer demand and business activity. An increase in production indicates economic growth, whereas a decline may signal difficulties ahead.

In addition, the trade balance is an important indicator of the UK's competitiveness on the global stage. A negative trade balance puts pressure on the national currency, while a positive balance supports it. Together, these factors will determine the further behavior of the GBP/USD pair.

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

Buy Scenario

Scenario No. 1: I plan to buy the pound today when the entry point reaches around 1.3584 (green line on the chart) with a target of rising to 1.3617 (thicker green line on the chart). Around 1.3617, I plan to close long positions and open short positions in the opposite direction (aiming for a 30–35-point move in the opposite direction from the level). Buying the pound today can be considered a continuation of the bullish trend, provided strong data are released. Important! Before buying, ensure the MACD indicator is above the zero mark and starting to rise from it.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of the 1.3564 price level when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. Growth can be expected toward the opposite levels of 1.3584 and 1.3617.

Sell Scenario

Scenario No. 1: I plan to sell the pound today after breaking below the 1.3564 level (red line on the chart), which will lead to a quick drop in the pair. The key target for sellers will be 1.3534, where I plan to close short positions and immediately open long positions in the opposite direction (aiming for a 20–25-point move in the opposite direction from the level). Selling the pound today is advisable only after weak data. Important! Before selling, ensure the MACD indicator is below the zero mark and is just starting to move down from it.

Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of the 1.3584 price level when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a reversal downward. A decline can be expected toward the opposite levels of 1.3564 and 1.3534.

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.