Trade Review and Trading Tips for the British Pound

The test of the 1.3238 price level occurred when the MACD indicator had just started moving upward from the zero line, confirming that it was the right time to enter a long position on the pound. However, the expected rise in the pound never materialized.

The pound is entering the second half of the day without any domestic economic releases, so its performance will depend on US economic data and Federal Reserve officials' speeches. The first key release will be the US Producer Price Index (PPI) for October, which is expected to slow from 1.3% to 0.4% m/m, while the annual figure is forecast to rise from 6.3% to 6.6%. The core index, excluding food and energy, is expected to decline from 0.7% to 0.3% m/m and remain at 5.0% y/y.

It is worth noting that the recent backdrop has become less favorable for the dollar. US consumer price data have exceeded forecasts for the third consecutive month, while futures markets are pricing in 25-basis-point rate hikes in December, January, and March. If the PPI matches expectations or comes in below them, GBP/USD will receive only brief relief, as the slowdown following September's record reading is already priced into market expectations. If the figures exceed forecasts, particularly the core reading, demand for the dollar will increase, and the pound will resume its decline. Particular attention should be paid to the annual figure: even with a weak monthly increase, the expected 6.6% is above the previous 6.3% and could support the dollar.

As for the intraday strategy, the focus will be primarily on implementing Scenarios #1 and #2.

Buy Signal

Scenario #1: Buying the pound is planned today when the price reaches the entry point around 1.3238 (the thin green line on the chart), with a target of a rise to 1.3267 (the thicker green line on the chart). Around 1.3267, long positions will be closed, and short positions will be opened in the opposite direction (targeting a move of 30–35 points in the opposite direction from this level). A rise in the pound today can be expected following weak US economic data. Important! Before buying, make sure that the MACD indicator is above the zero line and has just started rising from it.

Scenario #2: The pound can also be bought today if the price tests the 1.3218 level twice consecutively while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger an upward market reversal. A rise toward the opposite levels of 1.3238 and 1.3267 can be expected.

Sell Signal

Scenario #1: Selling the pound is planned today after the 1.3218 level is breached (the thin red line on the chart), which should lead to a rapid decline in the pair. The sellers' key target will be 1.3185, where short positions will be closed and long positions opened immediately in the opposite direction (targeting a move of 20–25 points in the opposite direction from this level). Strong pressure on the pound will return if US economic data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and has just started falling from it.

Scenario #2: The pound can also be sold today if the price tests the 1.3238 level twice consecutively while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposite levels of 1.3218 and 1.3185 can be expected.

What the Chart Shows

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price level at which Take Profit orders can be placed or profits can be closed manually, as further gains above this level are unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price level at which Take Profit orders can be placed or profits can be closed manually, as further declines below this level are unlikely;
• MACD indicator. When entering the market, it is important to take overbought and oversold conditions into account.

Important. Beginner Forex traders should exercise extreme caution when making market entry decisions. Before the release of major fundamental reports, it is best to stay out of the market to avoid exposure to sharp price fluctuations. If trading during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, the entire trading account can be lost very quickly, especially when large position sizes are used without proper money management.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on current market conditions is a losing strategy for intraday traders from the outset.