Trade Breakdown and Trading Advice for the British Pound

The test of the 1.3325 level occurred just as the MACD indicator began moving upward from the zero line, confirming a correct market entry. However, as shown on the chart, the pair failed to gain any strong upward momentum.

The recent decline in UK services sector activity and contraction in April pressured the pound. The services PMI dropped below the 50-point mark, significantly below economists' expectations. This indicates a slowdown in economic growth and raises concerns about the outlook for the UK economy. Investors responded by selling the British pound. It's worth noting that the services sector is a key part of the UK economy, accounting for a significant portion of GDP. A decline in this sector could negatively impact overall economic performance.

Investor focus now shifts to similar macroeconomic indicators from the US. Data is expected on the manufacturing PMI, services PMI, and the composite PMI for April. These reports will offer insight into the dynamics of production, consumer demand, and overall economic activity. PMI is traditionally a leading indicator used to assess business sentiment and forecast potential changes in the economy. Rising PMI reflects improving conditions and expected growth, while a drop suggests a slowdown or even recession.

Attention will also be on speeches by FOMC members Austan D. Goolsbee and Christopher Waller. Their comments on the current economic situation, inflation outlook, and future monetary policy could significantly influence dollar sentiment, especially after Trump's remarks yesterday about potentially lowering tariffs on China.

Buy Signal

Scenario #1: I plan to buy the pound today at an entry point around 1.3315 (green line on the chart) with a target of rising to 1.3360 (thicker green line on the chart). At 1.3360, I plan to exit the long position and open a short trade in the opposite direction (aiming for a 30–35 point move). Pound growth today is likely only after weak US data. Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise.

Scenario #2: I also plan to buy the pound in case of two consecutive tests of the 1.3285 level, while the MACD indicator is in the oversold area. This would limit the pair's downward potential and trigger a reversal upward. Growth toward the opposite levels of 1.3315 and 1.3360 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound today after the 1.3285 level is updated (red line on the chart), which could lead to a sharp drop in the pair. The main target for sellers will be 1.3239, where I'll exit short positions and open long ones in the opposite direction (aiming for a 20–25 point rebound). Sellers are likely to act if the data is strong. Important: Before selling, make sure the MACD indicator is below the zero line and just beginning to fall.

Scenario #2: I also plan to sell the pound in case of two consecutive tests of the 1.3315 level, while the MACD indicator is in the overbought area. This would limit the pair's upward potential and trigger a reversal downward. A drop to the opposite levels of 1.3285 and 1.3239 can be expected.

Chart Key:

• Thin green line – entry price to buy the instrument;
• Thick green line – estimated price to set Take Profit or lock in gains, as further growth above this level is unlikely;
• Thin red line – entry price to sell the instrument;
• Thick red line – estimated price to set Take Profit or lock in gains, as further declines below this level are unlikely;
• MACD Indicator – when entering trades, it's crucial to monitor overbought and oversold zones.

Important: Beginner Forex traders should exercise great caution when entering the market. It's best to stay out ahead of major fundamental reports to avoid sharp price swings. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you could lose your entire deposit quickly, especially if you don't use money management and trade in large volumes.

And remember, successful trading requires a clear plan, like the one outlined above. Making spontaneous decisions based on current market noise is a losing strategy for intraday traders.