Analysis of Trades and Tips for Trading the British Pound

The price test at 1.3627 coincided with the moment when the MACD indicator had already moved significantly below the zero mark, limiting the downside potential of the pair. The second test at 1.3627 prompted the implementation of Scenario No. 2 to buy the pound, resulting in a 20-pip rise in the pair.

Disappointing American data weakened the dollar and rekindled interest in higher-yielding assets. New home sales in July dropped to 607,000, while the inventory of unsold new homes rose to 9.6 months, clearly demonstrating how high rates cool demand in the housing market. The picture was further complemented by the Conference Board consumer confidence index, which fell to 89.4. The British pound took advantage of the dollar's weakness and strengthened against it. The weak housing market and deteriorating consumer expectations weakened the arguments for a hawkish Federal Reserve policy, undermining demand for the American currency.

Today, the British currency enters the first half of the day with its sights set on the Confederation of British Industry's retail sales release, which will be the main domestic benchmark for the session. Retail sales, according to the CBI, are considered an early indicator of consumer activity, as they are based on surveys of retail companies and precede official data, helping to gauge how confident British consumers feel. Poor figures could quickly bring pressure back on GBP/USD, as weakness in the retail sector would undermine confidence in the economy and give the Bank of England reason for caution. A strong report would provide support for the pound against the dollar.

As for the intraday strategy, I will rely more on implementing Scenarios No. 1 and No. 2.

Buying Scenarios

Scenario No. 1: I plan to buy the pound today when the entry point reaches around 1.3648 (the green line on the chart), aiming for a move to 1.3675 (the thicker green line on the chart). Around 1.3675, I plan to exit long positions and open short positions in the opposite direction (anticipating a movement of 30-35 pips in the opposite direction from the level). One can expect the pound to rise today in continuation of the trend. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning its upward movement from there.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3624 when the MACD indicator is in the oversold area. This will limit the downside potential of the pair and lead to an upward market reversal. I anticipate a rise to the opposite levels of 1.3648 and 1.3675.

Selling Scenarios

Scenario No. 1: I plan to sell the pound today after the 1.3624 level is updated (the red line on the chart), which will trigger a quick decline in the pair. The key target for sellers will be 1.3597, where I plan to exit the shorts and immediately open longs in the opposite direction (anticipating a movement of 20-25 pips in the opposite direction from the level). Only bad news will return pressure on the pound. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning its downward movement from there.

Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of 1.3648, with the MACD indicator in the overbought area. This will limit the upside potential of the pair and lead to a downward market reversal. I anticipate a decline to the opposite levels of 1.3624 and 1.3597.

What the Chart Shows:

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated price where take profit can be set, or profit can be realized, as further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated price where take profit can be set, or profit can be realized, 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 forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market 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 practice money management and trade large volumes.

And remember, successful trading requires a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.