Trade breakdown and trading advice for the British pound

The test of the 1.3771 price level occurred when the MACD indicator had already moved well above the zero line, which limited the pair's upward potential. For this reason, I did not buy the pound.

Data on the number of approved mortgage applications in the UK and the volume of net lending to individuals limited the pound's upward potential, as the figures came in worse than economists' forecasts.

Now everyone is waiting for the US Producer Price Index (PPI) figures. Market participants will closely analyze the overall inflation level reflected in the PPI. Actual readings exceeding forecasts may lead to US dollar strengthening, which would weaken the pound's position. The Chicago PMI index will also attract significant attention as an early indicator of economic momentum in the region.

However, far more interesting will be a speech by US President Donald Trump devoted to the new candidate for the position of Chair of the US Federal Reserve. Rather than guessing whom Trump will appoint, it is better to focus on market volatility immediately after the candidate is announced. Most likely, the dollar will react with gains to this news.

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

Buy Signal

Scenario No. 1: Today, I plan to buy the pound if the entry point is reached around 1.3771 (green line on the chart), targeting a rise toward the 1.3810 level (the thicker green line on the chart). Around 1.3810, I will exit long positions and open sell positions in the opposite direction (expecting a 30–35 point move in the opposite direction from the level). Pound growth today can be expected after weak US data.

Important: Before buying, make sure that the MACD indicator is above the zero line and is just starting to rise from it.

Scenario No. 2: I also plan to buy the pound today in the case of two consecutive tests of the 1.3721 price level while the MACD indicator is in the oversold area. This would limit the pair's downward potential and lead to a reversal upward. A rise toward the opposite levels of 1.3771 and 1.3810 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after an update (break/update) of the 1.3721 level (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers will be the 1.3665 level, where I will exit sell positions and also immediately open buy positions in the opposite direction (expecting a 20–25 point move in the opposite direction from the level). Pressure on the pound will return today in the case of strong data.

Important: Before selling, make sure that the MACD indicator is below the zero line and is just starting to decline from it.

Scenario No. 2: I also plan to sell the pound today in the case of two consecutive tests of the 1.3771 price level while the MACD indicator is in the overbought area. This would limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.3721 and 1.3665 can be expected.

What's on the chart:

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

Important: Beginner Forex traders should be extremely cautious when making market entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.