Trade Analysis and Tips for the British Pound

The test at 1.3311 coincided with the moment when the MACD indicator began moving down from the zero mark, confirming the correct entry point for selling the pound. As a result, the pair dropped more than 30 pips.

The shift in market expectations towards further interest rate hikes by the Federal Reserve set the tone for trading and provided the dollar with solid growth. Such a re-evaluation of monetary policy prospects traditionally acts as a strong driver for the US currency, and against this backdrop, the British pound became dependent on external forces. The widening interest rate gap between the US and the UK reduced the relative appeal of the pound, putting pressure on the GBP/USD pair.

Today's lack of reports from the UK in the first half of the day will set the direction for the pound. Without fresh figures, traders will have no reason to revise their positions. In the absence of internal benchmarks, the pound relies on external forces, and market sentiment towards the dollar will remain the key factor. This is why the chances of a significant recovery for the pound after yesterday's sell-off seem low. It would be easier for GBP/USD to recover significantly with a strong internal driver, but today there is none. At best, the British currency might expect a muted correction, while a substantial reversal would require a noticeable weakening of the dollar.

Concerning the intraday strategy, I will primarily rely on implementing scenarios #1 and #2.

Buying Scenarios

Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3301 (green line on the chart) with a target for growth at 1.3331 (thicker green line on the chart). Near 1.3331, I plan to exit from the long positions and open short positions in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from the level). It is unlikely that the pound will see significant growth today. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just starting to rise from there.

Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the price 1.3284 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. A rise to the opposite levels of 1.3301 and 1.3331 can be expected.

Selling Scenarios

Scenario #1: I plan to sell the pound today after the level of 1.3284 is updated (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be 1.3259, where I intend to exit shorts and immediately open longs in the opposite direction (expecting a move of 20-25 pips in the opposite direction from that level). Bad news will bring pressure back on the pound. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from there.

Scenario #2: I also plan to sell the pound today in the case of two consecutive tests of the price 1.3301 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 1.3284 and 1.3259 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.