Trade Analysis and Tips for Trading the British Pound

The test of the price at 1.3211 occurred at a moment when the MACD indicator had declined significantly from the zero mark, which limited the downward potential of the pair before the release of the FOMC decision. For this reason, I did not sell the pound and missed the entire downward movement.

Yesterday, the British pound sharply dropped following Powell's statement that future rate decisions now depend on incoming data. The market's reaction to Powell's words was immediate, resulting in a capital outflow from the pound, which is traditionally seen as a riskier asset. Investors, concerned about the uncertainty surrounding the UK's economic outlook and the Federal Reserve's lack of clear guidelines, preferred moving assets into safer currencies such as the US dollar.

Unfortunately, there is no statistical data for the UK today, so there isn't much to rely on. The pound is likely to remain under pressure, as no growth-supporting factors have been observed recently. The uncertainty surrounding the UK's future budget and potential changes in government policy further exacerbates negative sentiment. The UK Prime Minister's attempt to address the situation through new trade ties with the EU has also not been well received, putting additional pressure on the pound, which is expected to continue, especially in the absence of new economic signals.

Regarding the intraday strategy, I will focus more on implementing scenarios №1 and №2.

Buying Scenarios

• Scenario №1: I plan to buy the pound today upon reaching an entry point around 1.3219 (green line on the chart), with a target for growth to 1.3242 (thicker green line on the chart). At the 1.3242 level, I plan to exit my long positions and begin selling in the opposite direction (anticipating a move of 30-35 pips in the opposite direction from this level). Growth in the pound today can only be expected within the framework of a correction. Important! Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise from it.
• Scenario №2: I also plan to buy the pound today in the event of two consecutive tests of the price 1.3205 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to a market reversal. An increase can be expected towards opposing levels of 1.3219 and 1.3242.

Selling Scenarios

• Scenario №1: I plan to sell the pound today after it breaks the 1.3205 level (red line on the chart), which will trigger a quick decline in the pair. The key target for sellers will be the 1.3183 level, where I plan to exit my shorts and initiate longs in the opposite direction (anticipating a 20-25-pip move in the opposite direction from that level). Pound sellers may return to the market at any moment. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to decline from it.
• Scenario №2: I also plan to sell the pound today if the price tests 1.3219 twice in a row, 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 decrease can be expected towards opposing levels of 1.3205 and 1.3183.

What's on the Chart:

• Thin Green Line: Entry price for buying the trading instrument.
• Thick Green Line: Estimated price for setting Take Profit or personally taking profits, as further growth above this level is unlikely.
• Thin Red Line: Entry price for selling the trading instrument.
• Thick Red Line: Estimated price for setting Take Profit or personally taking profits, as further declines below this level are unlikely.
• MACD Indicator: When entering the market, it is important to consider the overbought and oversold zones.

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

Remember that to trade successfully, you need to have a clear trading plan, similar to the one presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.