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The price test at 1.3443 occurred when the MACD indicator was beginning to move up from the zero mark, confirming the correct entry point to buy the pound. As a result, the pair rose by 40 pips.
The sharp divergence of the employment report from market expectations set the tone for trading yesterday and undermined the dollar. Nonfarm payrolls in July fell by 23,000, while economists had expected an increase of 97,000, and that was enough to crash the US currency. Employment is considered a key indicator of the economy's condition, and its unexpected drop heightened concerns about a slowdown and weakened arguments for Federal Reserve tightening. The report was ambiguous, however, because the unemployment rate unexpectedly fell to 4.1 percent versus the forecast of 4.2 percent, and the number of unemployed totaled 6.9 million. Formally, this points to labor market resilience, but the failure in job creation prevailed, and the market focused on it. Weak hiring was the main signal of the day, and the dollar lost positions across the board. The British pound took advantage of the dollar's collapse and strengthened noticeably against it.
Today's empty economic calendar for the UK leaves the pound without its own drivers and makes it dependent on external background. In such a situation, the key factors for the pair become dollar dynamics and overall risk appetite. With a favorable external background, pound buyers have every chance to continue the bull market.
As for the intraday strategy, I will rely mainly on scenarios No. 1 and No. 2.
Scenario No. 1: I plan to buy the pound today when the price reaches the entry point of around 1.3498 (green line on the chart), with a target of 1.3519 (thicker green line on the chart). Around 1.3519, 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 growth today only after good data. Important! Before buying, make sure the MACD indicator is above zero and only beginning its rise from it.
Scenario No. 2: I also plan to buy the pound today in case of two consecutive tests of the 1.3485 price while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect growth to the opposing levels 1.3498 and 1.3519.
Scenario No. 1: I plan to sell the pound today after the level 1.3485 is renewed (red line on the chart), which will lead to a rapid decline of the pair. The sellers' key target will be 1.3459, where I intend to exit shorts and also 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 zero and only beginning its descent from it.
Scenario No. 2: I also plan to sell the pound today in case of two consecutive tests of 1.3498, with the MACD indicator in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline to the opposing levels 1.3485 and 1.3459.
Important: Beginner forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market 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 practice money management and trade large volumes.
And remember, successful trading requires a clear trading plan, as outlined 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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