Analysis of Trades and Trading Tips for the British Pound

The test of the price at 1.3519 coincided with the moment when the MACD indicator was just starting to move downward from the zero mark, confirming the correct entry point for selling the pound. However, a significant sell-off did not materialize.

Domestic political instability in the UK, along with US inflation data, led to the decline of the British pound yesterday. A sharp rise in US consumer prices, significantly exceeding economists' expectations, triggered a wave of caution among investors, which was immediately reflected in the value of major global currencies. The core Consumer Price Index (CPI) rose by 0.6% in April, surpassing forecasts. Of particular concern was the rise in the core CPI, which, despite excluding volatile components such as food and energy, accelerated to 0.4%.

Today, there is no significant fundamental data scheduled for the UK in the first half of the day, so all attention will be on the speech by Bank of England Monetary Policy Committee member Catherine L. Mann. Given the current inflation picture and the resilience of the British economy, Mann's words could have a substantial impact on the pound sterling's exchange rate. In the absence of economic data, traders will carefully analyze the tone and content of her speech. Any statements regarding inflation prospects, wage growth, or the state of the labor market will be perceived as signals for potential future interest rate hikes. It is important to remember that the BoE is under pressure to balance the fight against inflation with support for economic growth.

Regarding the intraday strategy, I will focus more on implementing scenarios #1 and #2.

Buy Scenarios

Scenario #1: I plan to buy the pound today upon reaching an entry price around 1.3558 (green line on the chart), targeting a rise to 1.3603 (thicker green line on the chart). At point 1.3603, I plan to exit the market and also sell the pound in the opposite direction, expecting a movement of 30-35 pips from the entry point. A strong rise in the pound can only be expected if there is good news from the Middle East. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3531 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. One can expect growth towards the opposite levels of 1.3558 and 1.3603.

Sell Scenarios

Scenario #1: I plan to sell the pound after the 1.3531 level is updated (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the level of 1.3464, where I plan to exit the short positions and immediately buy in the opposite direction, expecting a movement of 20-25 pips in the opposite direction from the level. Pressure on the pound could return if there is bad news from the Middle East. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning its decline from it.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of 1.3558 when the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a downward market reversal. One can expect a decline toward the opposite levels of 1.3531 and 1.3464.

What is on the Chart:

• The thin green line – entry price at which the trading instrument can be bought;
• The thick green line – approximate price where take profit can be set or to realize profit, as further growth above this level is unlikely;
• The thin red line – entry price at which the trading instrument can be sold;
• The thick red line – approximate price where take profit can be set or to realize profit, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to be guided by overbought and oversold zones.

Important: Beginner traders in the Forex market need to make entry decisions very cautiously. It is best to stay out of the market before important fundamental reports to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade in large volumes.

And remember, for successful trading, it is essential to have a clear trading plan, as outlined above. Making impulsive trading decisions based on the current market situation is fundamentally a losing strategy for an intraday trader.