Trade Review and Guidance on Trading the British Pound

The test of the 1.2927 price level occurred just as the MACD indicator began moving downward from the zero line, confirming a valid entry point for selling the pound. As a result, the pair declined by more than 40 points.

Inflation in the UK came in lower than economists' expectations, which triggered a sharp sell-off in the British pound. The released data showed a slowdown in consumer price growth, sparking expectations of a more dovish monetary policy from the Bank of England. In response, investors began actively selling off the British currency, fearing potential rate cuts. Economists attribute the inflation slowdown to a variety of factors, including lower energy prices and weakening demand for certain goods and services. However, despite the positive trend, inflation remains above the Bank of England's target, presenting a dilemma for the central bank. On one hand, lower inflation opens the door for policy easing; on the other hand, premature actions could spark another wave of price growth.

This afternoon promises to be eventful. U.S. Durable Goods Orders could support the U.S. dollar if the actual data exceeds analysts' consensus forecasts. In line with this week's theme, speeches from FOMC members are also expected to benefit the dollar. Interviews with Neel Kashkari and Alberto Musalem are anticipated, likely focusing on current inflation trends and monetary policy outlook. Markets are closely watching for any hints regarding the timing of possible rate cuts, and hawkish remarks could strengthen the dollar's position.

As for intraday strategy, I will mainly rely on Scenario #1 and Scenario #2.

Buy Signal

Scenario #1: I plan to buy the pound today when the price reaches the 1.2912 entry point (green line on the chart), targeting a rise to 1.2961 (thicker green line). I plan to exit long positions at 1.2961 and open short positions in the opposite direction, expecting a 30–35 point move down. A rise in the pound today would be considered a corrective upward move. Important: Before buying, make sure the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario #2: I also plan to buy the pound if there are two consecutive tests of the 1.2875 level, with the MACD in the oversold zone. This will limit the pair's downward potential and may result in a market reversal to the upside. Growth toward 1.2912 and 1.2961 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound after it breaks below 1.2875 (red line on the chart), which should lead to a quick drop. The primary target for sellers will be 1.2825, where I plan to exit short positions and immediately open longs in the opposite direction, expecting a 20–25 point rebound from this level. Sellers will become active if strong U.S. data is released. Important: Before selling, make sure the MACD indicator is below the zero mark and just beginning to fall from it.

Scenario #2: I also plan to sell the pound if there are two consecutive tests of the 1.2912 level while MACD is in the overbought zone. This would limit the upward potential and lead to a downward reversal. A decline toward 1.2875 and 1.2825 can then be expected.

Chart Legend:

• Thin green line – Entry price to buy the trading instrument
• Thick green line – Estimated price for Take Profit or manual profit locking, as further growth beyond this level is unlikely
• Thin red line – Entry price to sell the trading instrument
• Thick red line – Estimated price for Take Profit or manual profit locking, as further decline beyond this level is unlikely
• MACD Indicator – When entering the market, pay close attention to overbought and oversold zones

Important Note for Beginners:

Beginner Forex traders must be very cautious when deciding to enter the market. It is best to stay out of the market before the release of important fundamental reports to avoid being caught in sudden price swings. If you decide to trade during news releases, always use stop-loss orders to minimize losses. Without stop-losses, you can lose your entire deposit very quickly—especially if you're not using proper money management and trading large volumes.

And remember: Successful trading requires a clear trading plan, like the one presented above. Making spontaneous trade decisions based on the current market situation is a losing strategy for intraday traders.