The test of the price at 1.3615 coincided with the MACD indicator just beginning to move downward from the zero mark, confirming the correct entry point for selling the pound. As a result, the pair declined to the target level of 1.3585.
The complex geopolitical situation in the Middle East remains the main factor putting pressure on the British pound. The escalation of tensions in the region, following recent events in the Strait of Hormuz, has reignited concerns. In times of heightened risk, investors traditionally shift their focus to safer assets, and the US dollar, as one of the leading world reserve currencies, is at the top of that list. Against this backdrop, the British pound sterling is facing additional pressure.
Today, in the first half of the day, traders will focus on the UK as important macroeconomic reports are due. In particular, the Halifax house price index is expected to be published. This indicator traditionally reflects consumer confidence and the overall state of the economy, so any discrepancies from forecasts could significantly affect the British pound's exchange rate. In this context, the speech by Bank of England Governor Andrew Bailey will be particularly important. Given the current economic situation and inflationary threats, market participants will carefully analyze every statement from the central bank's head. If Bailey takes a decisive stance on future monetary policy, it could be a strong catalyst for strengthening the pound. There is a high probability that his comments will focus on suppressing inflation, suggesting a possible rate hike this summer. Such a scenario typically has a positive impact on the national currency, enhancing its attractiveness.
Regarding the intraday strategy, I will primarily rely on the implementation of Scenarios #1 and #2.
Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3585 (green line on the chart), targeting a move to 1.3624 (thicker green line on the chart). At around 1.3624, I intend to exit the market and immediately sell in the opposite direction (expecting a movement of 30-35 pips from the entry point). A strong rise in the pound can only be expected after good news is released. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just beginning to rise from there.
Scenario #2: I also plan to buy the pound today if the price tests 1.3563 twice in a row, when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. An increase to opposing levels of 1.3585 and 1.3624 can be expected.
Sell ScenariosScenario #1: I plan to sell the pound today after the 1.3563 level is updated (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the 1.3531 level, where I intend to exit my short positions and immediately buy in the opposite direction (expecting a move of 20-25 pips from the level). Pressure on the pound may return if negative news arises from the Middle East. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decline from there.
Scenario #2: I also plan to sell the pound today if two consecutive tests of 1.3585 occur while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decrease to opposing levels of 1.3563 and 1.3531 can be expected.
Important: Beginner traders in the Forex market need to make entry decisions very cautiously. It is best to stay out of the market before important fundamental reports to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade in large volumes.
And remember, for successful trading, it is essential to have a clear trading plan, as outlined above. Making impulsive trading decisions based on the current market situation is fundamentally a losing strategy for an intraday trader.