Trade Analysis and Recommendations for the British Pound

The price test at 1.3144 occurred when the MACD indicator had just started moving downward from the zero line, confirming the correct entry point for selling the pound and resulting in a nearly 20-point decline in the pair.

The increase in the UK Nationwide Housing Price Index above economists' forecasts did not help pound buyers. This may be due to the fact that the market has already priced in a moderate economic recovery, while investors remain focused on longer-term risks. Although the Nationwide data were positive, they failed to change the overall bearish sentiment toward the pound.

In the second half of the day, only weak data on U.S. new home sales and the Chicago PMI could provide a reason for profit-taking in the U.S. dollar. A dovish tone from Fed representatives Raphael Bostic and Beth M. Hammack could also hurt the dollar. New home sales, as a barometer of consumer activity and confidence, directly influence the dollar's performance. A decline in sales would signal slower economic growth, which in turn would weaken the U.S. currency. The Chicago PMI, reflecting the state of the manufacturing sector, will complement the picture. However, even negative macroeconomic data do not guarantee sustained dollar weakness. The decisive factor will be the rhetoric of Federal Reserve officials. If Bostic and Hammack take a hawkish stance, emphasizing the need to remain cautious in the fight against inflation, this could offset the negative effect of weak economic indicators and even strengthen the dollar.

As for the intraday strategy, I will focus primarily 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 1.3148 (green line on the chart), targeting a rise to 1.3182 (thicker green line on the chart). Around 1.3182, I intend to close long positions and open short ones in the opposite direction, expecting a 30–35-point move downward from that level. Pound growth today is possible only if the Fed adopts a very dovish tone.Important: Before buying, make sure the MACD indicator is above the zero line and just starting to rise from it.

Scenario No. 2: I also plan to buy the pound in case of two consecutive tests of the 1.3128 price level when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a reversal upward. Growth toward the opposite levels of 1.3148 and 1.3182 can then be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after breaking below the 1.3128 level (red line on the chart), which should lead to a quick decline in the pair. The key target for sellers will be 1.3096, where I plan to exit short positions and immediately open long ones in the opposite direction, expecting a 20–25-point rebound. The pound may fall sharply only if the Fed adopts a hawkish stance.Important: Before selling, make sure the MACD indicator is below the zero line and just starting to decline from it.

Scenario No. 2: I also plan to sell the pound today in case of two consecutive tests of the 1.3148 price level when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a downward reversal. A decline toward the opposite levels of 1.3128 and 1.3096 can be expected.

Chart Notes:

• Thin green line – entry price where buying is recommended;
• Thick green line – suggested level for setting Take Profit or manually securing profits, as further growth above this level is unlikely;
• Thin red line – entry price where selling is recommended;
• Thick red line – suggested level for setting Take Profit or manually securing 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 Notice for Beginner Traders

Beginner Forex traders should make entry decisions with extreme caution. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always set stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit — especially if you ignore money management principles and trade large volumes.

And remember: for successful trading, you must have a clear trading plan, such as the one presented above. Spontaneous trading decisions based on current market movements are an inherently losing strategy for intraday traders.