The test of 1.3655 occurred when the MACD indicator had just started moving upward from the zero line, confirming the validity of the entry point for a long position in the pound. As a result, the pair rose by almost 20 points, offsetting the loss from the sale at 1.3638.
The August UK business activity report showed an acceleration in economic activity, but the main driver was the services sector rather than manufacturing. The Composite PMI rose to a four-month high of 52.5, while Services PMI jumped to 52.8, its highest level in six months. Since services account for the largest share of the UK economy, the sector's recovery was the main positive aspect of the report and supported the pound. Manufacturing, however, moved in the opposite direction, with both the Manufacturing PMI and output falling to five-month lows. This created a picture that was the opposite of the eurozone, where manufacturing accelerated while services remained unchanged.
In the second half of the day, the direction of the pound will be determined by U.S. economic data, as there are no significant domestic catalysts for the British currency. The focus will be on the August U.S. PMIs for manufacturing, services, and the composite index. Under these circumstances, the pound will become dependent on external factors. Strong U.S. data could help the dollar strengthen at the end of the week, potentially putting pressure on GBP/USD.
As for the intraday strategy, I will primarily focus on Scenarios #1 and #2.
Scenario #1: I plan to buy the pound today when the entry point is reached around 1.3670 (the green line on the chart), with a target of 1.3701 (the thicker green line on the chart). Around 1.3701, I will close the long position and open a short position in the opposite direction, targeting a move of 30–35 points from the level in the opposite direction. Further gains in the pound as part of the current trend can be expected today only if the U.S. data are weak. Important: Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.
Scenario #2: I also plan to buy the pound today if the price tests 1.3652 twice consecutively while the MACD indicator is in the oversold zone. This should limit the pair's downward potential and trigger a reversal to the upside. A rise toward the opposite levels of 1.3670 and 1.3701 can be expected.
Sell SignalScenario #1: I plan to sell the pound today after the 1.3652 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 1.3623, where I will close the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points from the level in the opposite direction. Strong downward pressure on the pound will return today if U.S. data are strong. Important: Before selling, make sure that the MACD indicator is below the zero line and has only just started declining from it.
Scenario #2: I also plan to sell the pound today if the price tests 1.3670 twice consecutively while the MACD indicator is in the overbought zone. This should limit the pair's upward potential and trigger a reversal to the downside. A decline toward the opposite levels of 1.3652 and 1.3623 can be expected.
Important: Beginner Forex traders should exercise extreme caution when making entry decisions. 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 a news release, always place stop orders to minimize losses. Without stop orders, you can lose your entire trading account very quickly, especially if you do not use proper money management and trade large position sizes.
And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for an intraday trader.