The price test at 1.3518 occurred when the MACD indicator was just beginning to move down from the zero line, confirming the correct entry point to sell the pound. As a result the pair fell toward the target level of 1.3494.
The strong US employment report set the tone for trading and weakened the pound. The 162k gain versus a 55k consensus was already surprising, but the real shock was the revisions: July's employment decline was revised into a rise. In other words, a week of talk about a weakening labor market — fueled by weak ADP and soft ISM indices — was based on a figure that didn't exist. The pound became dependent on external forces and gave ground to the dollar, since the US currency's strength following the strong report undermined demand for riskier assets. Sterling had no domestic drivers, so the dollar's strength entirely determined its decline. I explain the divergence with leading indicators by methodology: it was the government sector, invisible to ADP, that pulled the report up. In my view, the situation for the Federal Reserve flipped, because the dovish stance lost its main support — the weak labor market.
Given there is no important UK data today, the pound will most likely try to regain positions and reach last Friday's highs.
As for intraday strategy, I will rely mainly on execution of Scenarios No. 1 and No. 2.
Scenario No. 1: I plan to buy the pound today if the entry point around 1.3521 (the green line on the chart) is reached, with a target to rise to 1.3542 (the thicker green line on the chart). Around 1.3542, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move in the opposite direction from that level). Expect pound strength today only after strong data. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3506, with the MACD indicator in an oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposite levels of 1.3521 and 1.3542.
Sell scenariosScenario No. 1: I plan to sell the pound today after the 1.3506 level (the red line on the chart) is breached, which will lead to a rapid decline in the pair. The key target for sellers will be 1.3485, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move in the opposite direction from that level). Bad news will bring pressure back on the pound. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to decline from it.
Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of 1.3521 while the MACD indicator is in an overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline toward the opposite levels of 1.3506 and 1.3485.
Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.
Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.