Trade Analysis and Tips for Trading the British Pound

The test of the 1.3400 price level occurred when the MACD indicator had just started moving upward from the zero line, confirming that it was the right point to enter a long position on the pound. As a result, the pair reached the target level of 1.3437.

Today, external factors are more important for the pound than domestic news. Following weak lending data on Thursday and a relatively uneventful UK budget announcement, the currency is trading while awaiting developments in the United States. The first event will be the October Chicago PMI, which is expected to decline to 55.8 from 58.8. This is still a relatively high reading, so a significant blow to the dollar is unlikely. However, the weaker the figure, the more support it will provide for those who believe that US economic growth is uneven. The main event will be a speech by Federal Reserve official Mary Daly. Her most recent comments were made on October 14. At the time, Daly said that further rate hikes would probably be necessary, but there was no urgency, and a measured decision would be preferable to reacting to limited information. She described the labor market as stable and emphasized that the risks of persistently high inflation remained elevated. She had also previously said that monetary policy was in a good position and that rising yields did not provide a reason to change interest rates. For the pound, this stance implies cautious support for the US dollar without any sharp moves.

As for the intraday strategy, the main focus will be on implementing Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: The plan is to buy the pound today when the price reaches the entry level around 1.3440 (the green line on the chart), with a target of 1.3479 (the thicker green line on the chart). Around 1.3479, the plan is to close long positions and open short positions, targeting a 30–35-point move downward from that level. The pound may advance today if US economic data are weak. Important! Before buying, make sure that the MACD indicator is above the zero line and has just started rising from it.

Scenario No. 2: The pound can also be bought today if the price tests the 1.3416 level twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger an upward market reversal. The pair could then rise toward the opposite levels of 1.3440 and 1.3479.

Sell Signal

Scenario No. 1: The plan is to sell the pound after the 1.3416 level is breached (the red line on the chart), which could lead to a rapid decline in the pair. The key target for sellers will be 1.3383, where the plan is to close short positions and immediately open long positions, targeting a 20–25-point move upward from that level. Strong selling pressure on the pound could return if US economic data are positive. Important! Before selling, make sure that the MACD indicator is below the zero line and has just started declining from it.

Scenario No. 2: The pound can also be sold today if the price tests the 1.3440 level twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a downward market reversal. The pair could then decline toward the opposite levels of 1.3416 and 1.3383.

What the Chart Shows

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the estimated price level at which Take Profit orders can be placed or profits can be taken manually, as further gains above this level are unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the estimated price level at which Take Profit orders can be placed or profits can be taken manually, as further declines below this level are unlikely.
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should be very cautious when making decisions about entering the market. Before the release of major fundamental reports, it is best to stay out of the market to avoid exposure to sharp exchange rate fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize potential losses. Without stop-loss orders, the entire trading account can be depleted very quickly, especially if you do not use proper money management and trade large volumes.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on current market conditions is a fundamentally losing strategy for an intraday trader.