Trade Review and Tips for Trading the British Pound

The price test at 1.3398 coincided with the moment when the MACD indicator was starting to move up from the zero mark, confirming it as a valid entry point for buying the pound and leading to a rise in the pair to the target level of 1.3430.

Weak American reports weakened the dollar yesterday and renewed interest in higher-yielding assets, including the British pound. The US economy grew by only 1.5% year-on-year in the second quarter. The slowdown in growth, coupled with cooling inflation, diminished arguments in favor of a hawkish Federal Reserve policy, as the weaker the economy and price pressures, the fewer reasons the central bank has to keep rates high. The British pound capitalized on the dollar's weakness and gained against it.

Today, data on the UK Nationwide housing price index is expected, as well as a speech by Bank of England Monetary Policy Committee member Huw Pill. These events could affect the dynamics of the British pound, potentially creating favorable conditions for building new long positions in the pair. The British real estate market is traditionally an important barometer of economic activity. The housing price index published today by Nationwide will provide relevant information on the state of the housing sector.

However, the focus is on Pill's speech. His comments on inflation expectations, growth prospects, and, most importantly, possible further steps regarding tightening monetary policy could lead to significant volatility.

As for the intraday strategy, I will primarily rely on the implementation of scenarios #1 and #2.

Buying Scenarios

• Scenario #1: I plan to buy pounds today when the entry point reaches around 1.3452 (the green line on the chart), targeting growth to 1.3484 (the thicker green line on the chart). At around 1.3484, I plan to exit my long positions and open short positions in the opposite direction, expecting a move of 30-35 pips from that level. Growth in the pound today can only be expected after good data. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning to rise from it.
• Scenario #2: I also plan to buy on pounds today if there are two consecutive tests of 1.3431 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to a market reversal upwards. A rise to the opposite levels of 1.3452 and 1.3484 can be anticipated.

Selling Scenarios

• Scenario #1: I plan to sell the pound today after the 1.3431 level is refreshed (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be 1.3408, where I plan to exit the shorts and immediately buy in the opposite direction (expecting a move of 20-25 pips in the opposite direction from the level). Bad news will return pressure on the pound. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decline from it.
• Scenario #2: I also plan to sell pounds today if there are two consecutive tests of the price at 1.3452 when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a market reversal downwards. A decline to the opposite levels of 1.3431 and 1.3408 can be expected.

What's on the Chart:

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated price for placing Take Profit or manually securing 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 placing Take Profit or manually securing profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it is important to be guided by the zones of overbought and oversold.

Important: New traders in the Forex market should make decisions about market entry very cautiously. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp fluctuations in the exchange rate. 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, for successful trading, it is essential to have a clear trading plan, like the one outlined above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for intraday traders.