Trade Breakdown and Tips for Trading the British Pound

The test of the 1.3024 price level occurred just as the MACD indicator was beginning to move upward from the zero line, confirming a correct entry point to buy the pound. As a result, the pound rose by 100 points.

Strong UK GDP data triggered another wave of British pound appreciation. Investors took this as a signal of greater resilience in the UK economy, easing fears of a potential recession. The pound's strength is also supported by expectations that the Bank of England will maintain interest rates, even though inflation in the UK is gradually declining, meaning there is no urgent need for further tightening.

Today, FOMC member John Williams is scheduled to speak. Additionally, U.S. Producer Price Index (PPI) data will be released. A drop in inflation could further weaken the dollar, driving up demand for riskier assets, including the pound. As for Williams' speech, investors will be watching closely for any hints of a shift in Fed monetary policy, as his remarks could provide valuable insights into the regulator's next steps.

For today's intraday strategy, I will rely mainly on Scenario #1 and Scenario #2.

Buy Signal

Scenario #1: I plan to buy the pound today if the price reaches the entry point around 1.3111 (green line on the chart), targeting a rise to 1.3221 (thicker green line). At 1.3221, I will exit long positions and open short trades in the opposite direction, anticipating a 30–35 point pullback from that level. A pound rally today is possible if U.S. inflation data disappoints. Important! Before buying, make sure the MACD indicator is above the zero line and just beginning to rise from it.

Scenario #2: I also plan to buy the pound today if the price tests 1.3050 twice in a row while the MACD is in the oversold zone. This should limit the pair's downward potential and trigger a reversal upward. A rise toward 1.3111 and 1.3221 may then be expected.

Sell Signal

Scenario #1: I plan to sell the pound after the price breaks below 1.3050 (red line), which could lead to a quick drop in the pair. The main target for sellers will be 1.2960, where I plan to exit short positions and open long ones in the opposite direction (expecting a 20–25 point bounce). Sellers will become more active if the data is strong. Important! Before selling, make sure the MACD is below the zero line and just starting to decline from it.

Scenario #2: I also plan to sell the pound today if the price tests 1.3111 twice while the MACD is in the overbought zone. This should limit the pair's upward potential and trigger a downward reversal. A decline toward 1.3050 and 1.2960 may then follow.

Chart Notes:

• Thin green line – entry price for buying the asset
• Thick green line – estimated Take Profit level or where to manually lock in gains, as further growth is unlikely above this level
• Thin red line – entry price for selling the asset
• Thick red line – estimated Take Profit level or where to manually lock in gains, as further decline is unlikely below this level
• MACD Indicator – used to gauge overbought or oversold conditions before entering the market

Important for Beginners:

Forex beginners must be extremely cautious when deciding to enter the market. It is best to stay out of the market before major economic reports to avoid being caught in sharp volatility. If you decide to trade during news releases, always use stop-loss orders to minimize losses. Without stop-losses, you could quickly lose your entire deposit, especially if you're trading large volumes without money management.

And remember, successful trading requires a clear plan, like the one presented above. Making impulsive trades based on current market conditions is an inherently losing strategy for intraday traders.