Trade Review and Advice on Trading the British Pound

The test of the 1.3327 price level occurred when the MACD had just begun moving upward from the zero line, confirming a good entry point for buying the pound. As a result, the pair rose by more than 30 points.

The market showed positive dynamics for the British pound against the US dollar. This was supported by encouraging data on the UK Services PMI. The index exceeded forecasts, reaching 53.9 points. This signals significant expansion in the country's key services sector, which was a pleasant surprise for investors. A reading above 50 traditionally indicates positive momentum, and 53.9 is one of the highest levels seen recently. Positive trends in the services sector, along with some stabilization in other areas, contributed to the strengthening of the pound.

During the U.S. session, data on the February ADP employment change in the United States and the ISM Services PMI are expected. These macroeconomic indicators are crucial for shaping expectations regarding the Federal Reserve's future monetary policy. The ADP report often serves as a preliminary signal ahead of the broader Non-Farm Payrolls report from the U.S. Department of Labor. Strong ADP data may indicate continued strength in the labor market, which in turn supports the likelihood of maintaining a tight Fed policy.

The ISM Services PMI is one of the most important leading indicators of economic activity in the United States. A reading above 50 indicates expansion in the sector, while a drop below that level signals contraction. Together, these two reports will provide traders with a more comprehensive picture of the state of the U.S. economy.

As for the intraday strategy, I will primarily rely on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy the pound at the entry point around 1.3406 (green line on the chart), with a target of 1.3439 (thicker green line on the chart). Around 1.3439, I will exit long positions and open short positions in the opposite direction (aiming for a 30–35 point move from that level). A pound rise today can be expected after weak U.S. data.Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound if there are two consecutive tests of the 1.3367 level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upward. Growth toward the opposite levels of 1.3406 and 1.3439 can then be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound after it breaks below the 1.3367 level (red line on the chart), which may trigger a rapid decline in the pair. The key target for sellers will be 1.3314, where I will exit short positions and immediately open long positions in the opposite direction (aiming for a 20–25 point move from that level). Pressure on the pound will return if U.S. data are strong.Important: Before selling, make sure the MACD indicator is below the zero line and just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound if there are two consecutive tests of the 1.3406 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decline toward the opposite levels of 1.3367 and 1.3314 can then be expected.

Chart Explanation

• Thin green line – entry price for buying the trading instrument.
• Thick green line – projected level for placing Take Profit or manually locking in profits, as further growth above this level is unlikely.
• Thin red line – entry price for selling the trading instrument.
• Thick red line – projected level for placing Take Profit or manually locking in profits, as further decline below this level is unlikely.
• MACD indicator – when entering the market, it is important to consider overbought and oversold zones.

Important

Beginner Forex traders should make market entry decisions very carefully. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

Remember, successful trading requires a clear trading plan, like the one outlined above. Spontaneous trading decisions based solely on the current market situation are inherently a losing strategy for an intraday trader.