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The price tested the 1.2513 level while the MACD indicator was in the oversold zone, which limited the pair's potential for further decline. For this reason, I chose not to sell the pound. Additionally, I didn't observe a second test of this level to consider making a purchase.
The British pound is currently under pressure as traders focus on negative economic indicators. Declining levels of production and consumption raise concerns about GDP growth, which showed no momentum in the third quarter of this year. Despite these challenges, the Bank of England is maintaining its stance on interest rates and is not rushing into making cuts. High inflation, which remains above target levels, compels central banks to proceed with caution.
Given these factors, traders should be prepared for volatility, especially during the holiday period when market activity and the presence of major players tend to diminish. Nevertheless, even in uncertain times, there are opportunities for those who can adapt and respond effectively to changing economic conditions.
There are no scheduled reports from the UK today, so I expect the pair to remain within the current trading range. For the intraday strategy, I will focus on implementing Scenario #1 and Scenario #2.
Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.2544 (green line on the chart) with a target of rising to the level of 1.2569 (thicker green line on the chart). Around 1.2569, I plan to exit purchases and open sales in the opposite direction (expecting a movement of 30-35 pips in the opposite direction from this level). A rise in the pound can only be expected as part of a correction. Important! Before buying, ensure that the MACD indicator is above the zero mark and starting to rise.
Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the 1.2523 level when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. Growth to the opposing levels of 1.2544 and 1.2569 can be expected.
Scenario #1: I plan to sell the pound today after breaking below the 1.2523 level (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be 1.2498, where I plan to exit sales and immediately open purchases in the opposite direction (expecting a movement of 20-25 pips in the opposite direction from this level). Selling the pound can continue in line with the downward trend. Important! Before selling, ensure that the MACD indicator is below the zero mark and starting to decline.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.2544 level when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decline to the opposing levels of 1.2523 and 1.2498 can be expected.
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