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The price test at 1.3367 coincided with the MACD indicator just starting to move down from the zero mark, confirming the correct entry point for selling the pound. As a result, the pair only fell by 15 pips.
Despite the positive momentum in the services sector, which traditionally accounts for a significant share of the UK's GDP, the currency failed to sustain its initial success. This suggests that investors may have already factored these data into their expectations or are seeking stronger reasons to keep buying the pound. Meanwhile, yesterday's ADP employment figures did not provide support to the US dollar either. This suggests that many traders are currently focusing more on the geopolitical conflict and the US-Israeli war with Iran. Investors will likely continue to assess the potential impact of the escalation on global oil supplies and overall economic stability, which will steer them away from purchasing risk assets.
Today promises to be rich in data. One of the main events in the first half of the day will be the release of information on the UK construction sector's business activity index. This key indicator, which characterizes the state of one of the leading segments of the economy, plays an important role in assessing the overall economic situation and can significantly influence the national currency's exchange rate. If the published data turns out worse than expected, this will undoubtedly increase pressure on the GBP/USD pair. Exceeding expectations in the downside direction will be interpreted by market participants as a sign of slowing activity in the construction sector, which in turn may indicate a slowdown in overall economic growth. This scenario will likely lead to a sell-off of the British pound as investors adjust their forecasts for the British economy.
Regarding the intraday strategy, I will rely more on implementing Scenarios No. 1 and No. 2.
Scenario No. 1: I plan to buy the pound today if the price reaches around 1.3341 (green line on the chart), targeting a move to 1.3378 (thicker green line on the chart). At 1.3378, I plan to exit the market and sell the pound back, expecting a move of 30-35 pips from the entry point. Growth in the pound today can only be expected after very good data are released. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.
Scenario No. 2: I also plan to buy the pound today if the price tests 1.3320 twice in a row while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. An increase to opposite levels of 1.3341 and 1.3378 can be expected.
Scenario No. 1: I plan to sell the pound after the 1.3320 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 1.3295 level, where I plan to exit the short positions and immediately buy back (expecting a 20-25-pip move in the opposite direction from the level). Sellers of the pound may reveal themselves at any moment. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning to drop.
Scenario No. 2: I also plan to sell the pound today if the price tests 1.3341 twice in a row 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. A decrease to opposite levels of 1.3320 and 1.3295 can be expected.
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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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