Trade Breakdown and Tips for Trading the British Pound

The price test at 1.2905 occurred when the MACD indicator had already moved significantly below the zero line, which limited the pair's downward potential. A second test of 1.2905 while the MACD was in oversold territory triggered Scenario #2 for buying, resulting in a gain of over 40 points.

Strong data on U.S. ADP employment change and factory orders could revive demand for the U.S. dollar. As a result, a decline in the British pound would be a natural consequence, as the UK economy continues to face its own challenges, including inflation and uncertainty over future trade prospects. These issues are unlikely to provide enough support to sustain the pound's value.

Comments from Adriana D. Kugler, a Federal Reserve representative, will likely focus on the need for careful analysis of macroeconomic data before making any further policy decisions. Her cautious approach, avoiding promises of rapid policy easing, may reinforce market expectations that high interest rates will remain for longer — a factor that would pressure the pound while supporting the dollar.

However, the main focus is now on Trump's speech and the announcement of reciprocal tariffs, the exact details of which are still unknown. This decision will undoubtedly trigger a series of global economic consequences, including increased volatility in markets and heightened concerns about an impending trade standoff.

As for today's intraday strategy, I will continue to rely primarily on Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.2952 (green line on the chart), with the target of rising to 1.3009 (thicker green line on the chart). Around 1.3009, I will exit long positions and open short positions in the opposite direction (targeting a 30–35 point reversal). A bullish outlook for the pound today is valid only after weak U.S. data. Important! Before buying, make sure the MACD indicator is above the zero line and just starting to rise from it.

Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the 1.2928 level, while the MACD indicator is in oversold territory. This would limit the downward potential and trigger a reversal to the upside. A rise toward the opposite levels of 1.2952 and 1.3009 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound today after a break below the 1.2928 level (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers is 1.2875, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point rebound). Sellers are likely to become more active if U.S. employment data is strong. Important! Before selling, make sure the MACD indicator is below the zero line and just beginning to move down from it.

Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the 1.2952 level, while the MACD is in overbought territory. This would limit the pair's upward and lead to a market reversal to the downside. A decline toward the opposite levels of 1.2928 and 1.2875 is expected.

Chart Explanation:

• Thin green line – Entry price to buy the trading instrument;
• Thick green line – Suggested Take Profit level or point to manually close profits, as further growth above this level is unlikely;
• Thin red line – Entry price to sell the trading instrument;
• Thick red line – Suggested Take Profit level or point to manually close profits, as further decline below this level is unlikely;
• MACD indicator – When entering the market, it's important to assess overbought and oversold conditions.

Important Note:

Beginner Forex traders should be extremely cautious when deciding to enter the market. It is best to stay out of the market before major fundamental reports are released to avoid getting caught in sharp price swings. If you choose to trade during news releases, always set stop-loss orders to minimize losses. Without stop-losses, you can lose your entire deposit very quickly — especially if you don't apply proper money management and are trading large volumes.

And remember, successful trading requires a clear trading plan, like the one I've provided above. Spontaneous decision-making based on the current market situation is fundamentally a losing strategy for intraday traders.