Trade Review and Tips for Trading the British Pound

The test of the 1.3341 price level occurred when the MACD indicator had just begun moving upward from the zero mark, confirming a correct entry point for buying the pound. As a result, the pair rose by more than 20 points.

However, pressure on the British pound later returned. The reason was the construction sector PMI, which declined to 44.5 points. It is important to note that the indicator is below the neutral 50-point level, which traditionally signals a contraction in activity.

The decline in the construction PMI is a concerning signal for the UK economy. The sector plays a significant role in job creation and contributes to the country's GDP. Reduced activity may indicate slowing investment, weaker demand for real estate, and broader economic difficulties.

Next, attention will shift to a key economic indicator — initial jobless claims in the United States. As one of the most timely indicators, it allows market participants to track layoff trends and the level of tension in the labor market in real time. A sharp increase or decrease in claims may serve as an early signal for adjustments to economic forecasts and corresponding actions by both regulators and businesses.

Alongside unemployment data, special attention will also be given to changes in unit labor costs and labor productivity in the non-farm sector. These metrics play an important role in assessing the efficiency of human resource utilization and their impact on overall economic activity.

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

Buy Signal

Scenario No. 1

Today, I plan to buy the pound if the price reaches the entry point around 1.3365 (green line on the chart), with a target of 1.3441 (thicker green line on the chart). Around 1.3441, I plan to close long positions and open short positions in the opposite direction, expecting a 30–35 point move from the level. Growth in the pound today can be expected after weak US economic data.

Important: Before buying, make sure the MACD indicator is above the zero level and just beginning to rise from it.

Scenario No. 2

I also plan to buy the pound if there are two consecutive tests of the 1.3333 level while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and lead to a reversal upward. In this case, growth toward 1.3365 and 1.3411 can be expected.

Sell Signal

Scenario No. 1

Today, I plan to sell the pound after the 1.3333 level is broken (red line on the chart), which may lead to a quick decline in the pair. The key target for sellers will be 1.3295, where I plan to close short positions and immediately open buy positions in the opposite direction (expecting a 20–25 point move). Pressure on the pound may return today if US data comes out strong.

Important: Before selling, make sure the MACD indicator is below the zero level and just beginning to decline from it.

Scenario No. 2

I also plan to sell the pound if there are two consecutive tests of the 1.3365 level while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a reversal downward. In this case, a decline toward 1.3333 and 1.3295 can be expected.

Chart Explanation

• Thin green line – entry price at which the instrument can be bought.
• Thick green line – the expected level where Take Profit can be set or profits can be locked in manually, as further growth above this level is unlikely.
• Thin red line – entry price at which the instrument can be sold.
• Thick red line – the expected level where Take Profit can be set or profits can be locked in manually, as further decline below this level is unlikely.
• MACD indicator – when entering the market, it is important to consider overbought and oversold zones.

Important for Beginner Forex Traders

Beginner traders in the Forex market should make market entry decisions very carefully. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp exchange rate fluctuations.

If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you may quickly lose your entire deposit, especially if you do not use proper money management and trade with large volumes.

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