Trade Analysis and Advice for Trading the British Pound

The price test at 1.3364 occurred when the MACD indicator was just beginning to move down from the zero line, confirming a correct entry point for selling the pound. As a result, the pair dropped to around 1.3340.

Today promises to be active for the financial markets, as investors and traders are focused on two key events: the release of the U.S. Producer Price Index (PPI) data and, more importantly, the Federal Open Market Committee (FOMC) decision on the key interest rate. The rate is expected to remain unchanged, but the accompanying details and forecasts will determine the dollar's further direction.

The speech by Federal Reserve Chair Jerome Powell will be a defining moment. Traders are looking for clarification on the Fed's future monetary policy, especially in light of recent tensions between the U.S. and Iran. Tensions in the Middle East are already significantly affecting the global economy, particularly energy prices, which may prompt the Fed to reconsider its plans. Any hints of a tighter policy stance will strengthen the dollar.

For intraday strategy, I will mainly rely on scenarios #1 and #2.

Buy Signal

Scenario #1: Buy the pound today at the entry point around 1.3367 (green line on the chart) with a target of 1.3404 (thicker green line on the chart). Around 1.3404, I plan to exit long positions and open sales in the opposite direction (aiming for a 30–35 point move in reverse). Pound growth can be expected following dovish Fed rhetoric.

Important: Before buying, ensure the MACD indicator is above zero and just beginning to rise from that level.

Scenario #2: I also plan to buy the pound in case of two consecutive tests of 1.3340 while the MACD is in the oversold zone. This will limit the pair's downward potential and trigger a reversal upward. Growth can be expected toward 1.3367 and 1.3404.

Sell Signal

Scenario #1: Sell the pound today after the level of 1.3340 is broken (red line on the chart), which should lead to a rapid decline. The key target for sellers is 1.3295, where I plan to exit and immediately open purchases in the opposite direction (aiming for a 20–25 point move). Selling pressure on the pound could return at any time.

Important: Before selling, ensure the MACD indicator is below zero and just beginning to move down from that level.

Scenario #2: I also plan to sell the pound in case of two consecutive tests of 1.3367 while the MACD is in the overbought zone. This will limit upward potential and trigger a reversal downward. A decline toward 1.3340 and 1.3295 can be expected.

Chart Legend

• Thin green line: Entry price for buying the instrument
• Thick green line: Suggested Take Profit or exit level, as further upward movement above this level is unlikely
• Thin red line: Entry price for selling the instrument
• Thick red line: Suggested Take Profit or exit level, as further downward movement below this level is unlikely
• MACD indicator: Important to follow overbought and oversold zones when entering the market

Important Notes for Beginner Forex Traders

Beginner traders should exercise extreme caution when entering the market. It is best to stay out of the market before major fundamental reports to avoid sudden price swings. If you choose to trade during news releases, always place stop orders to minimize losses. Without stop 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 presented above. Making spontaneous trading decisions based solely on current market conditions is a losing strategy for intraday traders.