Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair moved exactly the same as the EUR/USD pair on Friday and showed volatility equal to 29 points... Naturally, with such volatility, the direction of the pair's movement could only be one – sideways. Consequently, we were dealing with a low-volatility flat. In such conditions, it was not just difficult to trade, but almost impossible. The trend on the 30-minute TF is still descending, and there is no trend line or channel that could visualize the trend and provide guidance. The movements are as chaotic and unpredictable as possible. For example, the pound rose by 170 points out of the blue on Wednesday. And it fell by 120 on Thursday. And on Friday it passed "as much as" 29 points. Despite the fact that on Wednesday, Thursday, and Friday there were no important macroeconomic publications in either the UK or the US. In Britain, the inflation report was published on Wednesday, but it was published early in the morning, and the movement began in the evening. Thus, the pound remains near its 15-month lows and is generally preparing to continue falling against the dollar, since the absolute majority of factors are now in favor of the US currency.
5M chart of the GBP/USD pair
Novice traders can see a unique picture on the 5-minute timeframe – a flat in a 25-point channel. If the market still showed some signs of life in the European trading session, then it finally died in the US one. One trading signal was formed during the day – to buy, when the pair rebounded from the level of 1.3049. Novice traders could try to work it out, since at the time of its formation it was not yet clear that the pair was not going to move on Friday. However, in total, the price was able to go up 12 points. This was not enough to set the Stop Loss to breakeven, but it was not necessary, because the pair did not return to the level of 1.3049 either. As a result, the transaction could be closed manually anywhere, since at any time point the result of this transaction was the same. There is simply nothing more to say about the pair's movements on Friday.
How to trade on Monday:
On the 30-minute TF, the pair has been moving in recent weeks according to its own rules and logic, which is inaccessible to ordinary market participants. The pair was in a blatant flat for four days, then for no reason showed an increase of 170 points, and the next day, also for no reason, a drop of 120. Thus, there is no clear trend now, there is no trend line, and it is also impossible to understand how the pair will move in the near future. The general downward trend (which is visible on the higher TF) remains, but the movements look very confusing on the 30M-5M charts. On the 5-minute TF tomorrow, it is recommended to trade by levels 1.2913, 1.2981-1.2993, 1.3042-1.3049, 1.3102, 1.3145, 1.3210. When the price passes after opening a deal in the right direction, 20 points should be set to Stop Loss at breakeven. There are no important events or reports scheduled for tomorrow in the UK and America. As in the case of the euro, volatility is likely to increase, because 30 points is absolutely meager. But we should be ready for another "flat day".
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.
