Trade Review and Strategy for the British Pound

The test of the 1.3421 level occurred while the MACD indicator was just beginning to rise from the zero line, confirming a valid entry point for buying the pound. However, the anticipated strong upward movement failed to materialize.

The easing of U.S.–China trade tensions has helped the U.S. dollar strengthen, placing renewed pressure on the British pound. Investors who were previously concerned about further escalation in the trade conflict are now feeling some relief, which has led to capital flows in favor of more stable assets like the U.S. dollar. Improving global trade sentiment has also contributed to the greenback's strength.

At the same time, the British pound is under dual pressure. First, a strong dollar naturally weakens the pound-dollar pair. Second, the lack of significant domestic economic data from the UK provides no support for the pound.

Today, traders will watch the release of the UK's public sector net borrowing data. Only a sharp deviation from forecasts is likely to generate meaningful volatility. Strong results may provide brief support for the pound by triggering the closing of speculative shorts. Conversely, weaker-than-expected figures could reinforce bearish sentiment, especially against ongoing U.S. dollar strength.

For today's intraday strategy, I will focus on the execution of Scenario 1 and Scenario 2.

Buy Scenarios

Scenario 1: I plan to buy the pound at the entry level of 1.3392 (thin green line), targeting a rise toward 1.3424 (thick green line). Around 1.3424, I intend to exit long positions and open short positions on a reversal. This setup assumes a pull of 30–35 pips in the opposite direction from the target level. Buying is only advisable with strong supportive economic data.

Important: Before placing a buy order, confirm that the MACD indicator is above the zero mark and just beginning to rise.

Scenario 2: I will also consider buying after two consecutive tests of the 1.3367 level if MACD is in oversold territory. This would suggest limited downside potential and open the door to a reversal toward the 1.3392 and 1.3424 levels.

Sell Scenarios

Scenario 1: I will sell the pair after it breaks below 1.3367 (red line), anticipating a quick move down toward the 1.3340 level. I plan to exit short trades at 1.3340, and consider buying on the rebound, looking for a 20–25 pip pullback. Sellers are likely to act cautiously under current conditions.

Important: Before selling, ensure MACD is below zero and just beginning a downward move.

Scenario 2: I will also sell the pound after two consecutive tests of the 1.3392 level, provided MACD is in overbought territory. This would limit the pair's upside potential and support a reversal down toward 1.3367 and 1.3340.

Chart Key Explanations

• Thin green line – approximate entry point for long positions
• Thick green line – suggested Take Profit level or area to secure gains, as growth above this point is unlikely
• Thin red line – approximate entry point for short positions
• Thick red line – suggested Take Profit level or area to secure gains, as further decline is unlikely
• MACD Indicator – use overbought/oversold conditions to guide entry decisions

Important Note for Beginner Traders

If you are just starting out in Forex, exercise extreme caution when entering the market. It is safest to stay out during the release of major fundamental news to avoid being caught in sharp price swings. If you decide to trade during news events, always set Stop Loss orders to limit potential losses. Not placing Stop Loss orders can lead to rapid account depletion, especially if you don't apply proper money management techniques or trade with overly large positions.

Remember, successful trading requires a clear and structured plan like the one outlined above. Spontaneous decisions based on short-term market noise are a losing strategy for intraday traders. Stick to your plan, manage your risk, and only enter the market when conditions match your criteria.