Trade Analysis and Tips for Trading the British Pound

The test of the price at 1.3111 coincided with the MACD indicator just starting to move upward from the zero mark, confirming the right entry point for buying the pound. As a result, the pair rose by more than 40 pips.

The pound rose while the dollar fell after the University of Michigan consumer sentiment index sharply fell to 50.3 points. This figure is among the lowest in recent times, signaling growing concerns among Americans about the economic outlook. The sharp correction in consumer sentiment triggered a chain reaction in currency markets, as fears of a potential economic slowdown weakened the dollar's position.

As there are no economic data releases from the United Kingdom today, investors are likely to focus on the speech of Bank of England Deputy Governor for Monetary Policy, Clare Lombardelli. Traders will closely monitor every statement from Lombardelli in an effort to understand the future direction of the Bank of England's monetary policy. Her assessment of inflation will be particularly significant, given that it remains substantially above target levels despite the measures taken. Key signals that Lombardelli may provide include statements about the intention to maintain the key rate at upcoming meetings. However, the market's reaction to Lombardelli's speech will be determined not only by her tone but also by traders' overall sentiment.

Regarding the intraday strategy, I will be focusing more on implementing Scenarios 1 and 2.

Buy Scenarios

• Scenario 1: I plan to buy the pound today upon reaching an entry point around 1.3162 (green line on the chart), targeting growth to the level of 1.3184 (thicker green line on the chart). At the level of 1.3184, I plan to exit my long positions and open shorts in the opposite direction (aiming for a movement of 30-35 pips from the level). Expecting the pound to rise today is possible only after a strong position from the Bank of England representative. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise from there.
• Scenario 2: I also plan to buy the pound today in case of two consecutive tests of the price at 1.3144 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. A rise to the opposing levels of 1.3162 and 1.3184 can be expected.

Sell Scenarios

• Scenario 1: I plan to sell the pound today after the level of 1.3144 (red line on the chart) is broken, which will lead to a rapid decline in the pair. The key target for sellers will be the level of 1.3126, where I plan to exit my shorts and immediately buy back (aiming for a movement of 20-25 pips in the opposite direction from the level). Pound sellers could return to the market at any moment. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline from there.
• Scenario 2: I also plan to sell the pound today in the case of two consecutive tests of the price at 1.3162 when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downwards. A decline to the opposing levels of 1.3144 and 1.3126 can be anticipated.

What the Chart Shows:

• Thin Green Line: Entry price for buying the trading instrument.
• Thick Green Line: Estimated price where Take Profit can be set or where profit can be secured, as further increases above this level are unlikely.
• Thin Red Line: Entry price for selling the trading instrument.
• Thick Red Line: Estimated price where Take Profit can be set or where profit can be secured, as further decreases below this level are unlikely.
• MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.

Important: Beginner traders in the Forex market must be very cautious when making trading entry decisions. It is best to remain out of the market before the release of important fundamental reports to avoid getting caught in sharp price fluctuations. If you decide 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 with large volumes.

And remember that successful trading requires having a clear trading plan, similar to the one I presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.