Analysis of Trades and Trading Tips for the British Pound

The test of the 1.3570 price level during the first half of the day coincided with the MACD indicator just beginning to move down from the zero line, confirming a valid entry point for selling the pound and resulting in a decline of over 40 pips.

Weak data on UK economic growth once again exerted intense pressure on the pound. Investors concerned about the risk of recession sold off the pound following the release, but a broader sell-off did not occur as the weakness of the U.S. dollar came back into focus.

Later today, the U.S. will publish the Producer Price Index (PPI) for May. Since yesterday's consumer price data indicated a slowdown in inflation growth, the pound may respond positively again. The reported slowdown in consumer prices has fueled hopes that the Federal Reserve may soften its tight monetary stance. If the PPI confirms a trend of easing inflationary pressure, it would reinforce market expectations of a return to a rate-cutting cycle. The pound would likely gain additional momentum in such a scenario, as a weakening U.S. dollar typically supports other currencies. However, it's important to remember that a favorable PPI report does not guarantee sustainable pound strength.

For intraday strategy, I will focus primarily on Scenarios #1 and #2.

Buy Scenario

Scenario #1: I plan to buy the pound today at the entry point around 1.3600 (green line on the chart), targeting a rise to 1.3641 (thicker green line). At 1.3641, I will exit long positions and sell on the rebound (expecting a 30–35 pip pullback). A rise in the pound today may follow weak inflation data.

Important! Before buying, ensure the MACD indicator is above the zero mark and starting to rise.

Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the 1.3566 level while the MACD is in oversold territory. This would limit the pair's downside potential and trigger an upward reversal. A move toward 1.3600 and 1.3641 can be expected.

Sell Scenario

Scenario #1: I plan to sell the pound today after the price breaks 1.3566 (red line on the chart), which could lead to a rapid decline in the pair. The main target for sellers will be 1.3521, where I will exit short positions and immediately open long ones in the opposite direction (expecting a 20–25 pip rebound). Sellers are likely to emerge in the case of strong data.

Important! Before selling, make sure the MACD indicator is below the zero line and starting to decline from it.

Scenario #2: I plan to sell the pound today if 1.3600 is tested twice while the MACD is overbought territory. This would cap the pair's upside potential and lead to a reversal downward. A decline toward 1.3566 and 1.3521 can be expected.

What's on the Chart:

• The thin green line represents the entry price where the trading instrument can be bought.
• The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
• The thin red line represents the entry price where the trading instrument can be sold.
• The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
• The MACD indicator should be used to assess overbought and oversold zones when entering the market.

Important Notes:

• Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
• Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.