Trade analysis and tips for trading the British pound

The test of the 1.3290 level occurred when the MACD indicator was just beginning to move downward from the zero line, confirming a valid entry point for selling the pound. However, the pair did not go on to produce a significant decline.

The further rise of the British pound observed in the first half of the day may face certain limitations today. The main reason is the upcoming release of key U.S. macroeconomic data, namely the weekly ADP private employment report and pending home sales. If ADP data shows unexpectedly strong job growth, it could strengthen expectations of a more hawkish stance from the Federal Reserve regarding interest rates. In turn, positive pending home sales data may indicate continued resilience in the U.S. housing market despite the risks of prolonged high interest rates, which would also support the U.S. dollar. In such a scenario, a stronger dollar typically puts pressure on other major currencies, including the British pound, limiting its upward potential.

As for intraday strategy, I will rely more on implementing Scenarios No. 1 and No. 2.

Buy signal

Scenario No. 1: I plan to buy the pound today upon reaching the entry point around 1.3337 (green line on the chart), with a target at 1.3365 (thicker green line). Around 1.3365, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 point move). Pound growth can be expected after weak U.S. data.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 1.3317 level while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward reversal. Growth toward 1.3337 and 1.3365 can be expected.

Sell signal

Scenario No. 1: I plan to sell the pound after a break below 1.3317 (red line on the chart), which may lead to a quick decline. The key target for sellers will be 1.3291, where I plan to exit short positions and open long positions in the opposite direction (expecting a 20–25 point move). Pressure on the pound may return at any moment.Important: Before selling, make sure the MACD indicator is below the zero line and just beginning to decline.

Scenario No. 2: I also plan to sell the pound if there are two consecutive tests of the 1.3337 level while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a downward reversal. A decline toward 1.3317 and 1.3291 can be expected.

Chart explanation

• Thin green line – entry price for buying
• Thick green line – suggested 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 – suggested Take Profit level or area to lock in profits, as further decline below this level is unlikely
• MACD indicator – use overbought and oversold zones when making entry decisions

Important

Beginner Forex traders should be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you trade large volumes without proper risk management.

Remember, successful trading requires a clear trading plan like the one outlined above. Spontaneous trading decisions based on current market conditions are generally a losing strategy for intraday traders.