Trade Analysis and Trading Advice for the British Pound

The price test at 1.3225 occurred at a time when the MACD indicator was just beginning to move downward from the zero line, confirming a valid entry point for a short position on the pound, which resulted in a decline of only 12 points.

As the data showed, the UK economy has once again sent warning signals. The Composite PMI, a key indicator of business activity, fell to 49.4 in June. This marked the second consecutive month of contraction in the private sector, following a May reading of 49.7. Moreover, the June figure came in significantly below analysts' expectations of 50.6, which would have indicated expansion. A decline below the 50-point threshold, which traditionally separates expansion from contraction, signals negative economic trends. Of particular concern is the fact that contraction has now been recorded for two consecutive months, which may indicate the beginning of a more sustained downturn.

Next, similar data will be released for the United States. The Manufacturing PMI, Services PMI, and Composite PMI are expected. These indicators are key measures of the U.S. economy, reflecting sentiment across its two largest sectors. The Manufacturing PMI provides insight into the condition of factories and industrial production, including output, new orders, inventories, and employment. The Services PMI reflects activity in consulting, finance, transport, and other non-manufacturing sectors. Only very strong U.S. data would be capable of pushing the pound toward its weekly lows against the dollar.

Regarding the intraday strategy, I will focus mainly on scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today at an entry point around 1.3231 (green line on the chart), targeting a rise toward 1.3267 (thicker green line on the chart). Around 1.3267, I will exit long positions and open short positions in the opposite direction, expecting a 30–35 point pullback. A strong rally in the pound is unlikely today. Important: before buying, ensure that the MACD indicator is above the zero line and just beginning to rise from it.

Scenario #2: I also plan to buy the pound if there are two consecutive tests of the 1.3210 level while the MACD is in oversold territory. This would limit downward potential and trigger a reversal to the upside. A move toward 1.3231 and 1.3267 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound after a break below 1.3210 (red line on the chart), which would lead to a sharp decline in the pair. The key target for sellers is 1.3170, where I will exit short positions and immediately open long positions in the opposite direction, expecting a 20–25 point rebound. Selling pressure is expected to persist today. Important: before selling, ensure that the MACD is below the zero line and just beginning to decline from it.

Scenario #2: I also plan to sell the pound if there are two consecutive tests of 1.3231 while the MACD is in overbought territory. This would limit upward potential and trigger a reversal downward. A decline toward 1.3210 and 1.3170 can be expected.

What is shown on the chart:

• Thin green line – entry price for buying the instrument.
• Thick green line – expected take-profit level or level for manual profit-taking, as further upside above this level is unlikely.
• Thin red line – entry price for selling the instrument.
• Thick red line – expected take-profit level or level for manual profit-taking, as further downside below this level is unlikely.
• MACD indicator – entry decisions should be guided by overbought and oversold zones.

Important Note

Beginner Forex traders should be very cautious when entering the market. Before important fundamental releases, it is best to stay out of the market to avoid sharp volatility. If you choose to trade during news events, always use stop orders to minimize losses. Without stop-loss orders, you may quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

Remember that successful trading requires a clear trading plan, similar to the one presented above. Making spontaneous trading decisions based on current market conditions is a fundamentally losing intraday strategy.