Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair also traded lower on Friday and by the end of the day it was near the level of 1.3580, which it failed to overcome. But the main thing is that the price has rebounded again from the level of 1.3643, which is the upper limit of the assumed horizontal channel. Its lower limit is the level of 1.3488. Thus, the pound/dollar pair has been located between these two levels for several weeks, the distance between which is at least 150 points. The reason for the pound's decline on Friday could be anything. Given that there were no important publications in the US that day, and the only report on retail sales in the UK turned out to be positive, it is unlikely that macroeconomics somehow influenced the pair's movement. But a technical factor could play – a rebound from the level of 1.3643. A geopolitical factor could play a role, as the situation in the Donbas in Ukraine is escalating. Or maybe it's just a coincidence at all, since the price does not always move under the influence of any specific factors. Moreover, the movement was not so strong. The bad thing is that there is no trend at the moment. There is no trend line or channel.
5M chart of the GBP/USD pair
The technical picture on the 5-minute timeframe looks both bad and not bad at the same time. On the one hand, there were good movements during the day. On the other hand, there were no good trading signals. The first buy signal was formed when the price rebounded from the level of 1.3603 at the very beginning of the European trading session. After that, it went up by around 30 points, and novice traders had to, at least, place Stop Loss orders at breakeven. As a high, they could get a small profit on a long position. The second sell signal turned out to be contradictory, since during the time when the 1.3598-1.3603 area was overcome, the price almost immediately turned out to be near the next level of 1.3580, from which a rebound eventually followed, which was already a buy signal. However, it was formed at a time when novice traders should have already left the market. It should not have been worked out. As a result, only one transaction should have been opened.
How to trade on Monday:
The upward trend was canceled on the 30-minute TF, but a downward trend was not formed instead. The pair has been between the levels of 1.3488 and 1.3643 for 13 days, so there is simply no trend right now. The fundamental, macroeconomic and geopolitical background currently does not provoke serious movements in the market. We do not know when this kind of movement will end. On the 5-minute TF, it is recommended to trade by levels 1.3488, 1.3563-1.3580, 1.3598-1.3603, 1.3652-1.3660. When the price passes after the transaction is opened in the right direction, 20 points should be set to Stop Loss at breakeven. Business activity indices in the service and manufacturing sectors are scheduled to be published in the UK tomorrow. The probability that the market will pay attention to this data is low. And there are no other macroeconomic publications scheduled for the day. Thus, we advise novice traders to pay attention to the geopolitical background. If important news arrives, it may affect the dollar exchange rate in all pairs.
Basic rules of the trading system:
1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.
2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.
3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.
4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.
5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.
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.
The MACD indicator (14,22,3) 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 speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
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.
