Analysis of Trades and Advice on Trading the British Pound

The price test at 1.3387 coincided with the MACD indicator just starting to move upwards from the zero mark, confirming a good entry point to buy the pound. As a result, the pair only rose by 10 pips, after which the upward movement stalled.

Despite weak data from the US Empire State Manufacturing Index and Christopher Waller's dovish tone, the British pound remained within a range. This indicates that the recent strengthening of the pound has been linked to the weakness of the dollar rather than the strength of the pound itself. Expectations of a rate cut by the Bank of England may lead to a much larger correction in the pair than anticipated.

This morning, there are several important economic reports that will set the direction for the GBP/USD pair. The publication of data on unemployment in the UK and changes in average earnings is likely to trigger significant volatility in the exchange rate. Equally impactful will be the business activity indices for the services sector and manufacturing sector in the UK. Market participants will closely monitor these releases as they can adjust expectations regarding the BoE's future monetary policy. Positive labor data, supported by rising wages, could lift the pound. Conversely, unfavorable labor market data could raise concerns about the prospects for UK economic growth, consequently weakening the pound's position. Likewise, the PMI figures, which provide insights into business activity in key industries, will be thoroughly analyzed to assess the overall state of the British economy. A drop in the PMI indices below 50, indicating a contraction in business activity, could further pressure the BoE to adopt a more accommodative monetary policy, which could adversely affect the pound.

Regarding the intraday strategy, I will primarily rely on scenarios No. 1 and No. 2.

Buy Scenarios

Scenario No. 1: Today, I plan to buy the pound at the entry point around 1.3365 (the green line on the chart), targeting a move to 1.3385 (the thicker green line on the chart). At the 1.3385 point, I plan to exit my long positions and sell in the opposite direction, expecting a move of 30-35 pips from the entry level. Strong growth in the pound can only be anticipated after strong data. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from there.

Scenario No. 2: I also plan to buy the pound today if the price tests 1.3350 twice in a row while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to a market reversal upwards. We can expect growth to the opposite levels of 1.3365 and 1.3385.

Sell Scenarios

Scenario No. 1: I plan to sell the pound after the level at 1.3350 (the red line on the chart) is reached, which will trigger a quick decline in the pair. The key target for sellers will be the 1.3334 level, where I plan to exit my short positions and instantly open long positions in the opposite direction (targeting a move of 20-25 pips in the opposite direction from the level). Pound sellers will return if labor market data is weak. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting its decline from there.

Scenario No. 2: I also plan to sell the pound today if the price tests 1.3365 twice in a row while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a market reversal downwards. We can expect a decrease to the opposite levels of 1.3350 and 1.3334.

What's on the Chart:

• Thin green line – entry price at which you can buy the trading instrument;
• Thick green line – estimated price where you can set Take Profit or take profit yourself, as further growth above this level is unlikely;
• Thin red line – entry price at which you can sell the trading instrument;
• Thick red line – estimated price where you can set Take Profit or take profit yourself, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it is essential to be guided by overbought and oversold zones.

Important: Beginner traders in the Forex market need to make entry decisions with great caution. It is best to stay out of the market before significant fundamental reports to avoid sudden price fluctuations. If you choose to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

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