Trade analysis and tips for trading the British pound

The test of the 1.3556 level occurred when the MACD indicator had just started moving downward from the zero line, confirming a valid entry point for selling the pound. At the time of writing, the pair had declined by about 10 points, and the signal was still playing out.

The British pound showed a slight downward correction during the European trading session. The absence of new significant macroeconomic reports from the UK, which could have provided reasons for further trend movement, contributed to this correction. Traders, lacking new data to form new positions, preferred to act cautiously, leading to a modest sell-off of the pound.

In the second half of the day, attention should be given to the Empire Manufacturing Index and the NAHB Housing Market Index reports. Speeches by Michael S. Barr and Michelle Bowman are also scheduled. These releases and statements may influence market sentiment by providing insights into the state of the economy and potential intentions of the Federal Reserve. The Empire Manufacturing Index, published by the Federal Reserve Bank of New York, reflects business activity in New York State's manufacturing sector. The NAHB Housing Market Index, released by the National Association of Home Builders, is another key economic indicator. Strong or weak readings may signal the condition of the US economy.

Speeches by FOMC members Michael S. Barr and Michelle Bowman will also be analyzed for insights into the central bank's views on the current economic situation and monetary policy outlook.

As for the intraday strategy, I will rely more on scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy the pound today upon reaching the entry point around 1.3578 (green line on the chart), with a target at 1.3605 (thicker green line). Around 1.3605, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 point move). Pound growth today can be expected within the bullish trend.Important: Before buying, make sure the MACD indicator is above the zero line and just starting to rise.

Scenario No. 2: I also plan to buy the pound if there are two consecutive tests of the 1.3529 level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward reversal. Growth toward 1.3556 and 1.3578 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound after a break of the 1.3556 level (red line on the chart), which would lead to a quick decline. The key target for sellers will be 1.3529, where I plan to exit short positions and open long positions in the opposite direction (expecting a 20–25 point rebound). Pressure on the pound will return today if US data is strong.Important: Before selling, make sure the MACD indicator is below the zero line and just starting to decline.

Scenario No. 2: I also plan to sell the pound if there are two consecutive tests of the 1.3578 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal. A decline toward 1.3556 and 1.3529 can be expected.

Chart Notes:

• Thin green line – entry price for buying;
• Thick green line – estimated Take Profit level or area to lock in profits, as further growth above this level is unlikely;
• Thin red line – entry price for selling;
• Thick red line – estimated Take Profit level or area to lock in 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 be very cautious when making market entry decisions. 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 use proper money management and trade with large volumes.

Remember that successful trading requires a clear trading plan, like the one outlined above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for an intraday trader.