Analysis of Trades and Advice on Trading the British Pound

The price test at 1.3404 coincided with the moment when the MACD indicator had moved significantly upward from the zero mark, limiting the pair's upward potential. For this reason, I did not buy the pound.

Ambiguous signals in yesterday's US annual inflation data prevented the dollar from showing its full strength. The figure reached 4.2% in May, the highest in three years and the first since the beginning of 2023 when inflation surpassed the four percent barrier again. The key factor curbing the expected volatility in the currency market has been a more moderate trend in core inflation. This figure, which excludes the most volatile components such as energy prices and food, exhibited much calmer behavior: 2.9% year-over-year and only 0.2% growth month-over-month. Such a dichotomy between overall and core inflation creates a complex puzzle for analysts and, as a result, prevents the dollar from making a significant leap.

Today's trading session is again proceeding in a state of relative calm, devoid of any significant macroeconomic releases from the UK itself. The lack of new reports capable of shaking up the market deprives the British pound of substantial arguments for a significant strengthening against the US dollar. In such a situation, where catalysts for pronounced movement are absent, the pound will likely be forced to settle for moderate fluctuations, reacting to general market sentiment and the dynamics of the US currency.

As for the intraday strategy, I will rely more on implementing scenarios #1 and #2.

Buying Scenarios

Scenario #1: I plan to buy the pound today upon reaching an entry point around 1.3391 (green line on the chart) with a target growth to the level of 1.3434 (thicker green line on the chart). At point 1.3434, I intend to exit the market and open short positions in the opposite direction, expecting a move of 30-35 pips from the entry point. One can only expect growth in the pound today within the framework of a correction. Important! Before buying, ensure that the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the price at 1.3371, at a time when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. One can expect growth to the opposite levels of 1.3391 and 1.3434.

Selling Scenarios

Scenario #1: I plan to sell the pound today after updating the level at 1.3371 (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be 1.3331, where I plan to exit short positions and immediately open long positions in the opposite direction (expecting a move of 20-25 pips in the opposite direction from the level). Pressure on the pound could return at any moment. Important! Before selling, ensure that the MACD indicator is below the zero mark and just beginning to decline from it.

Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the price at 1.3391, when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. One can expect a decline to the opposite levels of 1.3371 and 1.3331.

What's on the Chart:

Thin green line – entry price for buying the trading instrument;

Thick green line – presumed price level for placing Take Profit or manually securing profits, as further growth above this level is unlikely;

Thin red line – entry price for selling the trading instrument;

Thick red line – presumed price level for placing Take Profit or manually securing profits, as further decline below this level is unlikely;

MACD Indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important: Beginner traders in the Forex market must be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid being caught in sharp fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you are not using money management and are trading large volumes.

And remember, for successful trading, you need a clear trading plan similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.