Analysis of Trades and Trading Advice for the British Pound

The test of the 1.3220 level occurred when the MACD indicator had just begun moving down from the zero level, confirming that this was an appropriate entry point for selling the pound. However, as of the time of writing, a major sell-off in the pound has not yet occurred.

According to the morning data, UK retail sales delivered an unpleasant surprise. The September CBI retail sales index fell to -55 points, while the market had anticipated a much more modest deterioration to -42. The deviation from expectations was substantial, suggesting that the cooling of consumer demand in the country is developing faster than analysts had anticipated. Although the pound managed to gradually recover some ground against the dollar during the first half of the day, before the release of these figures, the correction quickly faded after the report was published, and the pair resumed its decline. In my view, such a weak retail-sales result only reinforces the existing doubts about the sustainability of domestic demand in the UK economy, meaning that there are even fewer arguments in favor of a more decisive policy stance from the Bank of England.

In the second half of the day, only a couple of secondary US indicators will be released: weekly initial jobless claims, expected at 201,000 versus the recent range of 203,000–206,000, and New Home Sales, which most recently showed a decline to 607,000 on an annualized basis. Nevertheless, in my view, the market will focus not on the figures but on speeches by three Fed officials—Thomas Barkin, Beth Hammack, and John Williams. This backdrop is highly unfavorable for the pound, as weak domestic fundamentals and the hawkish tone of Fed officials both provide grounds for continuing to open short positions in GBP/USD.

As for the intraday strategy, I will place greater emphasis on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy the pound when the entry point around 1.3239 is reached (the green line on the chart), with a target of rising toward 1.3274 (the thicker green line on the chart). Around 1.3274, I will exit the long position and open a short position in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. The pound can be expected to rise today only following very weak US data. Important! Before buying, make sure that the MACD indicator is above the zero level and is just beginning to rise from it.

Scenario No. 2: Today, I also plan to buy the pound if the price tests 1.3211 twice consecutively while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to a reversal to the upside. A rise toward the opposite levels of 1.3239 and 1.3274 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell the pound after the 1.3211 level is broken (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3186, where I will exit the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Strong pressure on the pound may return at any time. Important! Before selling, make sure that the MACD indicator is below the zero level and is just beginning to decline from it.

Scenario No. 2: Today, I also plan to sell the pound if the price tests 1.3239 twice consecutively while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a reversal to the downside. A decline toward the opposite levels of 1.3211 and 1.3186 can be expected.

What Is Shown on the Chart:

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

Important. Beginner Forex traders should exercise extreme caution when making decisions about entering the market. Before the release of important fundamental reports, it is best to stay out of the market to avoid exposure to sharp price fluctuations. If you decide to trade during news releases, always use stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.