Trade Review and Advice on Trading the British Pound

The test of the 1.3565 level occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair's upward potential. For this reason, I did not buy the pound.

The pound posted a modest gain in response to the latest UK inflation data. The report stated that the core Consumer Price Index in January came in at 3.1%, slightly above economists' expectations of a decline to 3.0%. This may indicate that the Bank of England will be forced to maintain a tight monetary policy for longer than previously anticipated. These expectations regarding the central bank's future actions are currently supporting the pound.

Ahead, we have U.S. data on durable goods orders and industrial production, as well as a speech by FOMC member Michelle Bowman and the release of the minutes from the Federal Reserve's January meeting. All of these events have the potential to significantly impact market sentiment and, consequently, the dynamics of key financial assets.

Michelle Bowman's speech and the publication of the January Fed meeting minutes will be crucial for understanding the regulator's current stance and future intentions. Markets will carefully analyze any signals regarding future monetary policy, inflation expectations, and risk assessments. Particular attention will be paid to comments on the timing and pace of possible further interest rate cuts.

As for the intraday strategy, I will primarily rely on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy the pound upon reaching the entry point around 1.3578 (green line on the chart), targeting a rise to 1.3611 (thicker green line on the chart). Around 1.3611, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 point move in the opposite direction from that level). Pound growth today can be expected in the event of a dovish stance from Federal Reserve officials.Important! Before buying, ensure that the MACD indicator is above the zero line and just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the case of two consecutive tests of the 1.3564 level while the MACD indicator is in the oversold area. This would limit the pair's downward potential and trigger a market reversal upward. Growth toward the opposite levels of 1.3578 and 1.3611 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell the pound after a break below the 1.3564 level (red line on the chart), which could lead to a rapid decline in the pair. The key target for sellers will be 1.3537, where I plan to exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point move in the opposite direction from that level). Pressure on the pound will return in the event of a hawkish stance.Important! Before selling, ensure that the MACD indicator is below the zero line and just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today in the case of two consecutive tests of the 1.3578 level while the MACD indicator is in the overbought area. This would limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposite levels of 1.3564 and 1.3537 can be expected.

Chart Explanation

• Thin green line – entry price for buying the instrument;
• Thick green line – estimated Take Profit level or area to manually secure profits, as further growth above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – estimated Take Profit level or area to manually secure profits, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to consider overbought and oversold zones.

Important

Beginner Forex traders should make market entry decisions very cautiously. Before the release of major fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can quickly lose your entire deposit, especially if you do not apply proper money management and trade large volumes.

Remember, successful trading requires a clear trading plan like the one presented above. Spontaneous trading decisions based solely on the current market situation are inherently a losing strategy for an intraday trader.