Trade Review and Trading Tips for the British Pound

The price test at 1.3424 occurred at a moment when the MACD indicator was just beginning to move downward from the zero line, which confirmed a valid entry point for selling the pound. However, no significant downward movement followed.

Rather weak UK PMI data for May prevented the pound from extending gains against the US dollar. The Manufacturing PMI remained at 53.7 versus the forecast of 53.0, while the Services sector dropped sharply from April's 52.7 to 47.9. This significant decline points to a clearly weakening services sector, which is the main driver of the UK economy.

Attention now shifts to US labor market data and building permits statistics. These indicators are important measures of the health of the US labor market and construction sector, both of which significantly influence overall economic growth. In addition, data on the US Manufacturing PMI and Services PMI are also expected. These indices, based on surveys of purchasing managers, provide insight into business expectations and current economic activity. Strong readings signal optimism and growth, which may support the US dollar against the pound.

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

Buy Signal

Scenario #1: I plan to buy the pound today at an entry point around 1.3435 (green line on the chart), targeting a rise to 1.3466 (thicker green line). At 1.3466, I will exit long positions and open short positions in the opposite direction, expecting a 30–35 point reversal. A pound increase today is only possible after weak US data. Important: before buying, ensure that the MACD is above the zero line and just beginning to rise from it.

Scenario #2: I will also consider buying the pound if there are two consecutive tests of 1.3418 while the MACD is in oversold territory. This would limit downward potential and trigger a reversal upward. A move toward 1.3435 and 1.3466 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound after a break below 1.3418 (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers is 1.3383, where I will exit shorts and immediately consider buying in the opposite direction (expecting a 20–25 point rebound). Selling pressure may return on strong US data. Important: before selling, ensure that the MACD is below the zero line and just beginning to decline from it.

Scenario #2: I will also consider selling if there are two consecutive tests of 1.3435 while the MACD is in overbought territory. This would limit upward potential and lead to a downward reversal. A decline toward 1.3418 and 1.3383 can be expected.

What is shown on the chart:

• Thin green line – entry price for buying the trading instrument
• Thick green line – target price (Take Profit level), where further growth is unlikely
• Thin red line – entry price for selling the trading instrument
• Thick red line – target price (Take Profit level), where further decline is unlikely
• MACD indicator – entry decisions should consider overbought and oversold conditions

Important Notice

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

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