Trade Review and Recommendations for the British Pound

The test of the 1.3367 level occurred when the MACD indicator had already moved far above the zero mark, which limited the pair's upward potential.

The pound showed a slight increase against the U.S. dollar. With investors temporarily free from the burden of major economic reports, the focus shifted to technical factors and short-term market fluctuations, allowing the British currency to regain some ground. However, this growth is likely to be short-lived. In the coming days, a series of key economic indicators from the U.S. is expected to provide more clarity on the economic outlook.

Today also brings the FOMC's interest rate decision. If rates remain unchanged, the dollar may strengthen further against the pound. Many believe that maintaining the current policy will signal continued confidence in the stability of the U.S. economy, which will likely support the dollar. That said, alternative scenarios must be considered. If the FOMC unexpectedly signals a more dovish stance, it could cause short-term market panic and lead to a temporary dollar pullback due to profit-taking.

Additionally, the ADP employment change report and U.S. GDP data are due today. The ADP report serves as an early gauge of the labor market and may foreshadow the official figures from the Department of Labor. If the numbers significantly exceed expectations, inflation concerns may resurface, raising the possibility of a more aggressive Federal Reserve stance. GDP figures, on the other hand, will offer insight into the current state of the U.S. economy. Steady GDP growth would support the bulls, but also increase pressure on the Fed to curb inflation. Slowing GDP growth could raise recession fears and potentially trigger stock market sell-offs.

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

Buy Signal

Scenario #1: Today, I plan to buy the pound at the entry point around 1.3385 (green line on the chart), targeting a rise to 1.3435 (thicker green line). Around 1.3435, I plan to exit long positions and open short ones (anticipating a 30–35 point pullback). A stronger rally in the pound is only likely if U.S. data comes in weak. Important: Before buying, make sure the MACD indicator is above the zero line and just starting to rise.

Scenario #2: I also plan to buy the pound if the price tests the 1.3357 level twice while the MACD is in oversold territory. This would limit the pair's downward potential and trigger a reversal. A rise toward 1.3385 and 1.3435 may follow.

Sell Signal

Scenario #1: I plan to sell the pound after it breaks below the 1.3357 level (red line on the chart), which may lead to a rapid decline in the pair. Sellers will target 1.3301, where I plan to exit shorts and open long positions (expecting a 20–25 point bounce from this level). Sellers are likely to act at the first sign of weakness. Important: Before selling, make sure the MACD indicator is below zero and just beginning to decline.

Scenario #2: I also plan to sell the pound if the price tests the 1.3385 level twice while the MACD is in overbought territory. This would limit the pair's upward potential and trigger a downward reversal. The likely targets are 1.3357 and 1.3301.

Chart Key:

• Thin green line – entry price for buying the instrument;
• Thick green line – suggested take-profit level or a point for manually fixing profit, as further upside above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – suggested take-profit level or a point for manually fixing profit, as further downside below this level is unlikely;
• MACD Indicator – always refer to overbought and oversold zones before entering the market.

Important: Beginner Forex traders should exercise extreme caution when making market entry decisions. It is best to stay out of the market before the release of key economic reports to avoid sharp price swings. If you do choose to trade during news releases, always place stop-loss orders to minimize losses. Trading without stop-losses can quickly drain your account, especially if you ignore money management principles and trade large volumes.

And remember: successful trading requires a clear plan—like the one outlined above. Making spontaneous decisions based on current market conditions is a losing strategy for intraday traders.