Trade analysis and trading advice for the British pound

A test of the 1.3499 price level occurred at a moment when the MACD indicator was just beginning to move upward from the zero line, which confirmed a correct entry point for buying the pound. As a result, the pair rose by more than 30 points.

Strong UK PMI data provided solid support for the pound, continuing the development of a bullish market. Both the Manufacturing PMI and the Services PMI exceeded all analysts' expectations, demonstrating steady growth in economic activity. This, in turn, strengthened traders' confidence in the prospects of the British economy and led to increased demand for the pound.

In the second half of the day, I am expecting U.S. Manufacturing PMI and Services PMI figures. Reports on the University of Michigan Consumer Sentiment Index and inflation expectations will also be released. The Manufacturing PMI will provide insight into the state of the industrial sector, while its services counterpart will reflect dynamics in the sector that accounts for a significant share of U.S. GDP. Readings above 50 indicate expanding activity, while readings below 50 point to contraction. The University of Michigan Consumer Sentiment Index is another important indicator reflecting the confidence of U.S. citizens in the current economic situation and their expectations for the future. Improved sentiment usually has a positive impact on consumer spending, which plays a crucial role in stimulating economic growth. A decline in the index may signal emerging problems and a possible reduction in consumer activity. Inflation expectations, also published by the University of Michigan, are no less important. They show how much consumers believe in the Federal Reserve's ability to control price growth. Taken together, these data will help form a more complete picture of the state of the U.S. economy and its near-term prospects. The results may have a significant impact on the U.S. dollar.

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

Buy Signal

Scenario No. 1: Today, I plan to buy the pound when the entry point is reached at the level of 1.3545 (green line on the chart), with a growth target at 1.3569 (the thicker green line on the chart). Around 1.3569, I will exit long positions and open short positions in the opposite direction (expecting a move of 30–35 points in the opposite direction from that level). Pound growth today can be expected only after weak data.Important! Before buying, make sure that the MACD indicator is above the zero line and is 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 1.3522 price level at a time when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 1.3545 and 1.3569 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell the pound after an update (break) of the 1.3522 level (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 1.3496 level, where I will exit short positions and also immediately open long positions in the opposite direction (expecting a move of 20–25 points in the opposite direction from that level). Pressure on the pound will return today if strong data are released.Important! Before selling, make sure that the MACD indicator is below the zero line and is 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 1.3545 price level at a time when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.3522 and 1.3496 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 manually locked in, 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 manually locked in, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to focus on overbought and oversold zones.

Important. Beginner Forex traders should make market entry decisions very cautiously. Before the release of major 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 proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, like the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.