Trade Review and Advice on Trading the British Pound

The test of the 1.3410 level occurred when the MACD indicator had already moved significantly below the zero mark, but amid the military conflict between the U.S. and Iran, it was still reasonable to bet on further strengthening of the dollar and a decline in the pound. As a result, the pair fell toward the target level of 1.3354.

The British pound experienced a sharp drop following reports that the United Kingdom is actively assisting the United States in carrying out bombing operations on Iranian territory. This news, which appeared in leading global media outlets, triggered an immediate reaction in the currency markets, causing a collapse of the British currency. Experts attribute the rapid weakening of the pound to investor concerns about rising geopolitical instability and the potential economic consequences for the United Kingdom as a key U.S. ally. The UK's involvement in military operations, especially in such a sensitive region as the Middle East, could have far-reaching consequences.

Later, the only scheduled release will be the U.S. ISM Manufacturing Index. Strong data will boost demand for the dollar. Current analyst expectations suggest continued growth in the manufacturing sector, which could serve as a strong driver for buying the U.S. dollar. Solid ISM figures typically translate into increased confidence in the American currency, as they signal steady economic growth, which in turn may encourage the Federal Reserve to adopt a more hawkish stance on interest rates.

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

Buy Signal

Scenario No. 1: Today, I plan to buy the pound upon reaching the entry point around 1.3423 (green line on the chart), with a target of 1.3461 (thicker green line on the chart). Around 1.3461, I will exit long positions and open short positions in the opposite direction (aiming for a 30–35 point move in the opposite direction from that level). A rise in the pound today can only be expected after weak U.S. data.Important! Before buying, make sure that the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today if there are two consecutive tests of the 1.3390 level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and trigger an upward reversal. Growth toward the opposite levels of 1.3423 and 1.3461 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell the pound after it breaks and updates the 1.3390 level (red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3321, where I will exit short positions and immediately open long positions in the opposite direction (aiming for a 20–25 point move in the opposite direction from that level). Pressure on the pound will return today in the event of strong economic data.Important! Before selling, make sure that the MACD indicator is below the zero mark and just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of the 1.3423 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and trigger a downward reversal. A decline toward the opposite levels of 1.3390 and 1.3321 can be expected.

What's on the Chart:

• Thin green line – entry price at which you can buy the trading instrument.
• Thick green line – estimated level where you can set Take Profit or manually lock in profits, as further growth above this level is unlikely.
• Thin red line – entry price at which you can sell the trading instrument.
• Thick red line – estimated level where you can set Take Profit or manually lock in profits, as further decline below this level is unlikely.
• MACD indicator – when entering the market, it is important to rely on overbought and oversold zones.

Important. Beginner Forex traders must be very cautious when making market entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can very quickly lose your entire deposit, especially if you do not apply proper money management and trade large volumes.

And remember, successful trading requires a clear trading plan, like the one presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.