Analysis of Trades and Trading Tips for the British Pound

The price test of 1.3554 occurred when the MACD indicator had just started moving down from the zero mark, which confirmed the validity of the entry point for selling the pound and resulted in a drop of more than 50 pips.

Yesterday's events in the Middle East triggered a sharp sell-off of the British pound and a strengthening of the US dollar. However, the emergency US meeting on the Middle East did not result in a decision to attack Iran. This helped to somewhat calm the markets, although tensions in the region remain extremely high and continue to put pressure on the global economy. Fearing an escalation of the conflict, investors prefer to invest in safer assets like the US dollar and gold. Conversely, the pound is seen as a riskier asset, sensitive to geopolitical instability. The US decision to postpone military action has temporarily halted capital flight from the British currency, but the pound's long-term outlook remains uncertain.

Today, important data on the UK Consumer Price Index (CPI) and core inflation are expected. Traders are watching these figures closely, as they are key inflation indicators and significantly influence Bank of England monetary policy. The release of CPI and core inflation data will significantly determine the pound's short-term movement. If inflation comes in higher than expected, the pound will likely strengthen as markets price in the potential for prolonged rate stability. Conversely, if inflation comes in below forecasts, the pound may weaken. In addition to the absolute values, investors will also pay close attention to inflation dynamics.

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

Buy Scenario

Scenario #1: I plan to buy the pound today upon reaching the entry point near 1.3467 (green line on the chart), with a target of 1.3507 (thicker green line). Around 1.3507, I plan to exit long positions and open short positions in the opposite direction (targeting a 30–35 pip move from the level). A bullish outlook for the pound today is valid only if the inflation data is strong.

Important! Before buying, ensure the MACD indicator is above the zero mark and beginning to rise.

Scenario #2: I also plan to buy the pound if there are two consecutive tests of the 1.3436 level while the MACD is in the oversold zone. This would limit the pair's downside potential and trigger a reversal to the upside. A rise to the opposite levels of 1.3467 and 1.3507 can be expected.

Sell Scenario

Scenario #1: I plan to sell the pound after the 1.3436 level is broken (red line on the chart), likely leading to a quick drop in the pair. The key target for sellers will be 1.3393, where I plan to exit short positions and open long positions in the opposite direction (targeting a 20–25 pip retracement from the level). Selling the pound will be viable in case of weak inflation data.

Important! Before selling, make sure the MACD indicator is below the zero mark and beginning to decline.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.3467 level while the MACD is in the overbought zone. This would limit the pair's upside potential and lead to a downward market reversal. A drop to the opposite levels of 1.3436 and 1.3393 can be expected.

What's on the Chart:

• The thin green line represents the entry price where the trading instrument can be bought.
• The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
• The thin red line represents the entry price where the trading instrument can be sold.
• The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
• The MACD indicator should be used to assess overbought and oversold zones when entering the market.

Important Notes:

• Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
• Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.