Trade Analysis and Tips for Trading the British Pound

The price test at 1.3149 coincided with the MACD indicator just beginning to move down from the zero mark, confirming the correct entry point to sell the pound. However, the pair did not experience a significant drop.

After disappointing U.S. housing market reports, the U.S. dollar weakened against the British pound. Negative information from the housing sector, one of the most important for the U.S. economy, raised concerns among investors closely monitoring the country's economic conditions. Typically, when key reports indicate such declines, the market reacts negatively. The report showed that sales of new homes in the U.S. dropped by 7.3% compared to the previous month. This has raised doubts about the sustainability of the U.S. economic upturn, especially amid ongoing inflation and the Federal Reserve's tightening of monetary policy.

Today's report on retail sales from the Confederation of British Industry is expected to be a key indicator of consumer demand in the UK. Analysts and market participants will carefully examine this data to assess the current dynamics of household spending, which is one of the main drivers of economic growth. Special attention will be paid not only to the overall sales volume but also to its components—sales of non-food items, food, and vehicles, as well as regional differences. Historically, the CBI report provides valuable insights into retail sector sentiment, reflecting both positive and negative factors affecting consumers. Weak indicators could quickly return pressure on the British pound.

Regarding the intraday strategy, I will focus more on implementing scenarios No. 1 and No. 2.

Buy Scenarios

Scenario No. 1: I plan to buy the pound today upon reaching the entry point in the area of 1.3188 (green line on the chart) with a target growth to the level of 1.3215 (thicker green line on the chart). At around 1.3215, I plan to exit my long positions and sell immediately on the pullback (expecting a movement of 30-35 pips from the entry point). We can only expect the pound to rise today based on strong data from the UK. Important! Before buying, ensure that the MACD indicator is above the zero mark and just beginning its rise from there.

Scenario No. 2: I also plan to buy the pound today in case of two consecutive tests of 1.3173 while the MACD indicator is in the oversold area. This will limit the downward potential of the pair and lead to an upward market reversal. We can expect growth to the opposing levels of 1.3188 and 1.3215.

Sell Scenarios

Scenario No. 1: I plan to sell the pound today after the level at 1.3173 (red line on the chart) is updated, which will lead to a quick drop in the pair. The key target for sellers will be 1.3144, where I intend to exit my shorts and open immediate longs in the opposite direction (expecting a move of 20-25 pips from the level). Bad news will increase pressure on the pound. Important! Before selling, ensure that the MACD indicator is below the zero mark and just beginning its decline from there.

Scenario No. 2: I also plan to sell the pound today in case of two consecutive tests at 1.3188, while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. We can expect a decline to opposing levels of 1.3173 and 1.3144.

What's on the Chart:

Thin green line – entry price for buying the trading instrument;

Thick green line – presumed price level 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 – presumed price level 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 consider the overbought and oversold zones.

Important: Beginner traders in the Forex market must be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid being caught in sharp fluctuations. 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 are not using money management and are trading large volumes.

And remember, for successful trading, you need a clear trading plan similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.