Trade Analysis and Trading Tips for the British Pound

The test of 1.3370 occurred when the MACD indicator had just started moving down from the zero line, confirming that it was an appropriate entry point for a short position on the pound. As a result, the pair declined toward the target level of 1.3350.

The pound fell and updated last week's low, but sellers failed to extend the move. The speed of the buyers' reaction near the lows indicates that the market is not yet ready to break below the lower boundary of the range without an additional catalyst. In my view, this behavior of the pair should be considered a sign of a relative balance of forces: sellers are able to push the pound toward local lows but do not have enough arguments to consolidate their gains, while buyers, in turn, are actively defending the established channel levels. In the second half of the day, the market will focus on a series of speeches by FOMC members John Williams, Tom Barkin, and Philip Jefferson, while the release of the Richmond Fed Manufacturing Index will most likely receive less attention. Following the Fed's decisive move and the notable tightening of its forecasts, the rhetoric of these three speakers will show how sustainable the committee's new hawkish stance is. If their comments confirm a readiness for further action, the dollar may strengthen its gains from yesterday with relatively little resistance. Such a scenario would be particularly unfavorable for the pound against the backdrop of the Bank of England's decision to leave its interest rate unchanged despite inflation accelerating to 3.1%.

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

Buy Signal

Scenario No. 1: I plan to buy the pound today when the entry point around 1.3370 is reached (the green line on the chart), with a target of 1.3384 (the thicker green line on the chart). Around 1.3384, I will close the long position and open a short position, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pound today can be expected only if the Fed adopts a less hawkish stance. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today if the price tests 1.3355 twice consecutively while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal to the upside. A rise toward the opposite levels of 1.3370 and 1.3384 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after the price breaks below 1.3355 (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3336, where I will close the short position and immediately open a long position, targeting a move of 20–25 points in the opposite direction from the level. Strong downward pressure on the pound may return at any time. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today if the price tests 1.3370 twice consecutively while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal to the downside. A decline toward the opposite levels of 1.3355 and 1.3336 can be expected.

What Is Shown on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the expected price at which Take Profit orders can be placed or profits can be closed manually, 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 at which Take Profit orders can be placed or profits can be closed manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take the overbought and oversold areas into account.

Important. Beginner Forex traders need to be very cautious when making decisions about entering the market. Before the release of important fundamental reports, it is best to remain out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.