Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair traded identically to the EUR/USD pair on Monday. At first, the British currency rate collapsed by 100 points in half an hour after the opening, and then, by the end of the day, it recovered to Friday's closing levels. Thus, we can say that there were multidirectional movements during the day. We have already said earlier that at this time the downward trend is quite formal. Two collapses of the pair at once (on Thursday and Monday night) were provoked by strong geopolitical news. Therefore, they cannot be considered forming a trend or any trend for the matter. There are no two reference points now anyway, so neither a trend line nor a channel can be built now. Nevertheless, the pair may resume its decline or even go into a long-term flat (flat on the 4h and 24h charts). No important macroeconomic statistics in either the US or the UK on Monday, but they were not necessary. The pair traded quite volatile without it, being content with a strong geopolitical background.
5M chart of the GBP/USD pair
On the 5-minute timeframe, the movement and trading signals on Monday were almost perfect. If you do not take into account the movement at night, it all started with a good buy signal in the European trading session, when the price bounced from the level of 1.3342. In the future, the pair continued to grow and overcame the level of 1.3365. However, a little later it settled back below it, which became a signal to close long positions and open short positions. This signal turned out to be false, since after its formation, the price could not go down even 15 points. But the next buy signal turned out to be strong, as the price again overcame the level of 1.3365 and managed to grow to the level of 1.3431. Thus, novice traders could open three trades, two of which turned out to be profitable. In general, the daily movement of the pair was quite good, even better than for the euro, since there were minimal rollbacks during the day. Unfortunately, in the current geopolitical situation, such good movements may not be observed every day...
How to trade on Tuesday:
The pair left the horizontal channel on the 30-minute TF, but at the same time, despite the strong drop in quotes in the last few days, there is no trend now. There is no trend line, no channel. The pound's decline can easily resume tomorrow with the same intensity (as it actually was tonight). And the corrective movement may continue. Now it is extremely difficult to predict the pair's movements, as the market is in shock. How long this shock will persist largely depends on the events in Ukraine. On the 5-minute TF tomorrow, it is recommended to trade by levels 1.3310, 1.3342, 1.3365, 1.3431-1.3440, 1.3488, 1.3537, 1.3580. When the price passes after the opening of the transaction in the right direction, 20 points should be set to Stop Loss at breakeven. Only the business activity index for the manufacturing sector is scheduled for tomorrow in the UK. The ISM Manufacturing Sector Business activity index will be released in the US. We believe that these reports will have almost no effect on the pair's movement. The market will continue to focus on geopolitics.
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.
