Trade Review and Trading Recommendations for the British Pound

The test of the 1.3452 price level occurred when the MACD indicator had just begun moving lower from the zero line, confirming a valid entry point for selling the pound. As a result, the pair declined by only 10 points.

The British pound remained under pressure despite an upward revision of the UK Services PMI for May to 49.3. However, despite the improvement, it is important to note that the PMI remains in contraction territory. This means that the services sector, a key driver of the UK economy, continues to face significant pressure. Challenges related to inflation, high borrowing costs, and uncertainty in global markets continue to weigh on the business environment.

Traders will now focus on U.S. labor market data, which traditionally serves as an indicator of the health of the American economy. Today, ADP will release its report on the change in U.S. private-sector employment. This indicator often acts as a leading signal for the official labor market figures, and its result may set the tone for subsequent trading.

In addition, the Institute for Supply Management (ISM) will release its Services PMI. This indicator, which reflects conditions in one of the most important sectors of the U.S. economy, traditionally has a significant impact on investor sentiment. Strong data will help the U.S. dollar extend its gains against the pound.

As for my intraday strategy, I will primarily rely on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy the pound today when the price reaches the entry level around 1.3457 (the green line on the chart), targeting a rise to 1.3480 (the thicker green line on the chart). Near 1.3480, I plan to exit long positions and open short positions in the opposite direction, targeting a reversal of 30–35 points from that level. A rise in the pound today can only be expected if U.S. data comes in weaker than forecast.

Important: Before buying, make sure that the MACD indicator is above the zero line and has just begun moving higher from it.

Scenario No. 2: I also plan to buy the pound if there are two consecutive tests of the 1.3444 level while the MACD indicator is in oversold territory. This would limit the pair's downward potential and trigger a reversal to the upside. In this case, growth toward 1.3457 and 1.3480 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound after a break below the 1.3444 level (the red line on the chart), which should lead to a rapid decline in the pair. The key downward target for sellers will be 1.3421, where I plan to exit short positions and immediately open long positions in the opposite direction, targeting a rebound of 20–25 points from that level. Pressure on the pound is likely to return today if U.S. data comes in strong.

Important: Before selling, make sure that the MACD indicator is below the zero line and has just begun moving lower from it.

Scenario No. 2: I also plan to sell the pound if there are two consecutive tests of the 1.3457 level while the MACD indicator is in overbought territory. This would limit the pair's upward potential and trigger a downward market reversal. In this case, a decline toward 1.3444 and 1.3421 can be expected.

Chart Explanation:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated Take Profit level or an area where profits can be manually secured, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated Take Profit level or an area where profits can be manually secured, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to use overbought and oversold zones as guidance.

Important: Beginner Forex traders should exercise extreme caution when making market entry decisions. Before the release of major fundamental reports, it is best to remain out of the market to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Without stop-loss orders, you can lose your entire deposit very quickly, especially if you do not apply proper money management and trade large position sizes.

Remember that successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based solely on the current market situation is inherently a losing strategy for an intraday trader.