Trade Review and Advice on Trading the British Pound

The test of the 1.3485 level occurred when the MACD indicator had just begun moving downward from the zero line, confirming a proper entry point for selling the pound. As a result, the pair declined toward the target level of 1.3465.

Next, the U.S. Producer Price Index (PPI) will be released, along with the core PPI (excluding food and energy prices). In addition, the Chicago PMI index will be published. Strong reports could restore demand for the dollar at the end of the week. The PPI release will be one of the key events, as these figures provide insight into inflationary pressure in the economy at early stages. Particular attention will be paid to both the headline PPI and its core version, which excludes volatile components. A steady increase in these indices could heighten inflation concerns, potentially prompting the Federal Reserve to adopt a more cautious stance, thereby strengthening the U.S. dollar.

Alongside the PPI data, the Chicago manufacturing PMI will offer a fresh assessment of industrial activity in one of the key U.S. manufacturing regions. This index is a leading indicator reflecting purchasing managers' sentiment regarding production volumes, new orders, employment, and prices. Strong Chicago PMI data indicating growth would also support the U.S. dollar against the pound.

As for the intraday strategy, I will mainly rely 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 1.3495 (green line on the chart), targeting growth toward 1.3530 (thicker green line on the chart). Around 1.3530, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 point move from that level). Pound growth today can be expected after weak U.S. data.Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound if there are two consecutive tests of the 1.3476 level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward reversal. Growth toward the opposite levels of 1.3495 and 1.3530 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound after a breakout below 1.3476 (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers will be 1.3446, where I plan to exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point move from that level). Pressure on the pound will return today if U.S. data are strong.Important: Before selling, make sure the MACD indicator is below the zero line and just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound if there are two consecutive tests of the 1.3495 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.3476 and 1.3446 can be expected.

Chart Explanation

• Thin green line – entry price for buying the instrument;
• Thick green line – estimated Take Profit level or area to lock in profits manually, as further growth above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – estimated Take Profit level or area to lock in profits manually, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to consider overbought and oversold zones.

Important: Beginner Forex traders should make market entry decisions with great caution. 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 potential losses. Without stop-loss orders, you may quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

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