The price test at 1.3476 coincided with the MACD indicator moving significantly below the zero mark, limiting the pair's downward potential. For this reason, I did not sell the pound.
The British pound declined sharply amid escalating geopolitical tensions. The sharp drop in exchange rates followed the UK leaders' joint statement that threatened military action against Iran. Markets interpreted this news as a signal for further destabilization in the region, which directly impacted the value of the British currency. Investors, concerned about the potential economic consequences of such developments, including possible disruptions in energy supplies and interruptions to trade routes, chose to reduce their positions in the pound. This factor, along with overall uncertainty, contributed to the rapid depreciation of the UK national currency, reaching one of its lowest levels in recent times.
Regarding data, the release of the UK PMI manufacturing activity index will be of primary importance today. This statistical indicator, which reflects the state of one of the pillars of the national economy, will provide insight into the current situation in the industry, incoming order volumes, and the sector's future prospects. It is generally believed that the data obtained will answer the question of whether British industry has managed to cope with previously encountered problems and maintain a steady uptick. Additionally, information is expected regarding changes in housing prices according to Nationwide. This index serves as an early indicator of the state of the country's real estate market, reflecting price dynamics and, consequently, consumer confidence and purchasing power. Any fluctuations in this indicator may hint at emerging trends in a sector with a significant share of consumer spending.
As for the intraday strategy, I will primarily rely on the implementation of Scenarios #1 and #2.
Scenario #1: I plan to buy the pound today when it reaches the entry point around 1.3446 (green line on the chart), targeting a move to 1.3497 (thicker green line on the chart). At point 1.3497, I plan to exit my long positions and immediately sell in the opposite direction, expecting a 30-35-pip move back from the level. Pound growth can only be anticipated after very strong data. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning an upward move from it.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3410 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. One could expect a rise to the opposing levels of 1.3446 and 1.3497.
Sell ScenariosScenario #1: I plan to sell the pound today after breaking the level of 1.3410 (red line on the chart), which could lead to a quick decline in the pair. The key target for sellers will be the 1.3354 level, where I plan to exit my shorts and immediately buy on the bounce (expecting a 20-25-pip move back from the level). Pound sellers can emerge at any moment. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning its downward movement.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of 1.3446 while the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a market reversal downward. One could expect a decline to the opposing levels of 1.3410 and 1.3354.
Important: Beginner traders in the forex market need to make entry decisions very carefully. It is best to stay out of the market before the release of important fundamental reports to avoid sharp fluctuations in prices. If you choose to trade during the release of news, always set Stop Loss orders to minimize losses. Without placing Stop Loss orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember, successful trading requires a clear trading plan, like the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.