Trade Breakdown and Trading Tips for the British Pound

The test of the 1.3394 level occurred just as the MACD indicator began moving downward from the zero line, confirming a valid market entry point. As a result, the pair dropped by more than 30 points.

The absence of UK news supported the pound's rally early in the European session, but pressure returned later. In the second half of the day, market direction will be shaped by speeches from FOMC members Philip N. Jefferson and Patrick T. Harker. The Richmond Fed Manufacturing Index will also be released; however, only exceptionally strong figures would trigger a more noticeable GBP/USD correction. Any significant dollar strength driven by hawkish remarks or an unexpectedly high Richmond index reading is likely to be short-lived. Despite temporary headwinds, the pound retains its bullish trend, supported by Bank of England decisions. Therefore, if GBP/USD dips due to external factors, I plan to open long positions in anticipation of renewed upward momentum for the British currency.

For intraday strategy, I'll rely on implementing Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today on a drop to the entry point around 1.3382 (green line on the chart) with a target of rising to 1.3413 (thicker green line). I will exit my buy trades around 1.3413 and open shorts in the opposite direction (targeting a 30–35 point pullback). The bullish trend remains intact. Important: Before buying, ensure the MACD indicator is above the zero line and just beginning to rise.

Scenario #2: I also plan to buy the pound if the price tests 1.3356 twice, while the MACD is in oversold territory. This would limit the downward potential and prompt a reversal to the upside. A move toward 1.3382 and 1.3413 can then be expected.

Sell Signal

Scenario #1: I plan to sell the pound after a break below 1.3356 (red line on the chart), which would likely lead to a quick drop in the pair. The key target for sellers will be 1.3326, where I will exit short positions and consider immediate long entries (targeting a 20–25 point pullback). Sellers will likely show up, though not aggressively. Important: Before selling, ensure the MACD is below the zero line and just starting to decline.

Scenario #2: I will also consider selling the pound if the price tests 1.3382 twice and the MACD is in overbought territory. This will cap the pair's upward potential and trigger a reversal down toward 1.3356 and 1.3326.

Chart Explanation

• Thin green line – the price at which you can enter long positions
• Thick green line – suggested Take Profit level or a point to manually close profits, as further growth is unlikely above this area
• Thin red line – the price at which you can enter short positions
• Thick red line – suggested Take Profit level or a point to manually close profits, as further decline is unlikely below this area
• MACD indicator – key for identifying overbought/oversold zones before entering trades

Important Note: Beginner Forex traders must be especially cautious when entering the market. It's best to stay on the sidelines ahead of important fundamental reports to avoid sharp price swings. If you choose to trade during news releases, always place stop-loss orders to minimize risk. Trading without stop-losses can lead to rapid capital loss, especially if you're not practicing proper money management and are trading large volumes.

And remember, successful trading requires a well-defined plan—like the one outlined above. Making spontaneous decisions based on short-term market conditions is usually a losing strategy for intraday traders.