Analysis of previous deals:
30M chart of the GBP/USD pair
Yesterday, the GBP/USD pair continued to trade even more actively on the 30-minute timeframe than it did on Friday, when several very important macroeconomic reports were published in the US, which provoked a strong drop in the dollar. Today, there were also formal reasons for such a strong fall. However, it is very difficult to explain them, since market participants could interpret the results of the elections to the Parliament of Scotland in any way. The pound has risen in price, although the victory of the Scottish National Party brings Scotland closer to secession from the UK, which can hardly be considered a positive factor for the British pound. On the other hand, it is undoubtedly very premature to now speak of Scotland's withdrawal from the UK, since it is far from certain that a referendum on independence will be held, that those who support the return to the European Union will win. Thus, it is quite possible that the results of the elections in Scotland have nothing to do with how the US dollar fell today. Nevertheless, two signals were generated on this timeframe. Both for long positions. The signal from the MACD indicator should be ignored, as it was formed too high, but the signal to surpass 1.4081 could and should have been worked out. After its formation, the pair went up by about 60 points, so the deal should have been closed at Take Profit 40-50 points. No macroeconomic reports during the day.
5M chart of the GBP/USD pair
The picture on the 5-minute timeframe is approximately the same as on the 30-minute timeframe, only slightly more detailed. Buy signals were formed on this chart exactly in the same place as on the 30-minute chart - near the level of 1.4081. Here, even the corresponding signal was formed earlier, although this does not make a fundamental difference, since a long position should have been closed by Take Profit anyway. The 1.4157 level is the day's high, that is, it has just been plotted on the chart, therefore it did not participate in today's trading. Thus, novice traders today could earn 40-50 points of profit per pound, with which we congratulate them.
How to trade on Tuesday:
At this time, there is an upward trend on the 30-minute timeframe. But this is the main problem - the movement is too strong and can at any moment be replaced by an equally strong fall. There is no trend line at this time, and the movement is practically recoilless, so the MACD indicator simply does not have time to discharge to the zero level in order to form a strong buy signal. Therefore, here you need to wait, at least, for a correction. The important levels on the 5 minute timeframe are 1.4081, 1.4157, 1.4181 and 1.4238. The price can bounce off them or overcome them. As before, we set Take Profit at a distance of 40-50 points. You can also use all the nearest levels as targets, but then you need to take profit, taking into account the strength of the movement, so as not to close the deal too early. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven. Bank of England Governor Andrew Bailey will speak in the UK on Tuesday. This is potentially an important event that can provoke a market reaction. On the other hand, now and without Bailey, the pair movement is very strong.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
