Trade Review and Tips for Trading the British Pound

The test of the 1.3597 level occurred when the MACD indicator had just begun moving upward from the zero mark, confirming a good entry point for buying the pound. As a result, the pair rose by only 10 points.

In the second half of the day, the U.S. Manufacturing PMI is expected to be released. This indicator, calculated by the Institute for Supply Management, is one of the most important leading indicators of the U.S. economy, as it reflects both sentiment and actual activity in the manufacturing sector. Strong ISM Manufacturing PMI data—exceeding forecasts or showing steady growth compared to the previous month—will inevitably have a positive impact on the U.S. dollar. Investors will interpret this as evidence of the resilience and strength of the manufacturing sector, reinforcing expectations for future economic growth and, consequently, supporting the dollar.

Conversely, if the index shows weakness or falls below expectations, it may trigger the opposite reaction. Weak manufacturing data could signal a slowdown in business activity, reducing the attractiveness of U.S. assets and potentially leading to a decline in the dollar against the British pound, thereby continuing the upward trend observed since yesterday following the Bank of England's monetary policy meeting.

As for the intraday strategy, I will rely more on implementing Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy the pound today upon reaching the entry point around 1.3614 (green line on the chart), targeting growth to 1.3652 (thicker green line on the chart). Around 1.3652, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 point move). Further pound growth today is only likely after weak U.S. data.Important! Before buying, make sure the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today if there are two consecutive tests of the 1.3590 level while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 1.3614 and 1.3652 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after a breakout below 1.3590 (red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3540, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point move). Pressure on the pound will return today if U.S. data is strong.Important! Before selling, make sure the MACD indicator is below the zero mark and just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of the 1.3614 level while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.3590 and 1.3540 can be expected.

Chart Explanation

• Thin green line – entry price for buying the instrument;
• Thick green line – estimated level for placing Take Profit or locking in profits, as further growth above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – estimated level for placing Take Profit or locking in profits, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to consider overbought and oversold zones.

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

Remember, successful trading requires a clear trading plan like the one outlined above. Making spontaneous trading decisions based on current market conditions is generally a losing strategy for intraday traders.