Analysis of Trades and Trading Tips for the British Pound

The price test at 1.3529 in the second half of the day coincided with the moment when the MACD indicator had just started moving upward from the zero line, confirming a correct entry point for buying the pound. As a result, the pair rose toward the target level of 1.3573.

Yesterday, the employment data from ADP in the U.S. was much weaker than anticipated. Combined with disappointing data from the ISM services sector, this resulted in a significant downward pressure on the U.S. dollar, which in turn supported the British pound. The market immediately reacted to these signals, interpreting them as a potential sign of a slowing US economy. This, in turn, pushed investors to reassess the likelihood of further aggressive Federal Reserve policy. Meanwhile, despite its own economic challenges, the British pound gained support against the weakening dollar. It's important to note that currency pair dynamics are always relative — weakness in one currency can automatically strengthen another.

Today, in the first half of the day, we expect data on the UK Construction PMI and a speech from Sarah Breeden, a member of the Bank of England's Financial Policy Committee. The market is eagerly awaiting the PMI results, as they can provide valuable insight into the current state of the construction sector, a key indicator of the country's overall economic health. A decline in the index could signal slowing activity, likely raising concerns about growth prospects. Conversely, an increase could boost optimism and support the pound.

Breeden's speech also draws significant interest. Investors will closely watch her comments on the UK's financial stability and any hints regarding future dovish moves by the BoE.

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

Buy Scenario

Scenario #1: Today, I plan to buy the pound at the entry point around 1.3566 (green line on the chart), aiming for a rise toward 1.3610 (thicker green line on the chart). Around 1.3610, I plan to exit long positions and open short positions in the opposite direction, targeting a move of 30–35 pips in the reverse direction. Expect a substantial rise in the pound only after solid economic data.

Important! Before buying, ensure the MACD indicator is above the zero line and moving upward.

Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the 1.3539 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. Expect a rise toward the opposite levels of 1.3566 and 1.3610.

Sell Scenario

Scenario #1: I plan to sell the pound after the 1.3539 level (red line on the chart) is broken, which should lead to a quick decline in the pair. The main target for sellers will be the 1.3504 level, where I plan to exit short positions and immediately open longs, targeting a move of 20–25 pips in the reverse direction. Selling the pound can be considered after a failed attempt to break above the daily high.

Important! Before selling, ensure that the MACD indicator is below the zero line and just beginning its downward move.

Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.3566 price level when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal. Expect a decline toward the opposite levels of 1.3539 and 1.3504.

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.