Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair also continued to fall without long swings on Monday. The pound lost another 120 points during the day. As in the case of the euro, there was no good reason for a new fall in the British currency. Moreover, the fall began at night, when the European and US sessions had not even started yet. Of course, it can be assumed that the Asian market also decided to work out the information at the end of last week, thanks to which a new, powerful fall began. But there was no particularly important information. The pound, like the euro currency, began to fall due to a combination of a number of factors and reasons, which we have repeatedly written about. On Friday, for example, there were no extravagant events or reports at all, although formally the fall began exactly at the time when the report on retail sales in the UK was published. There was also no report or important event today, but the pound continued to fall and did so all throughout the day. Traders managed to overcome the important level of 1.2980 on Friday, which had repeatedly kept the pair from falling again, and it seems that this breakthrough provoked not just a fall, but a strong decline.
5M chart of the GBP/USD pair
The pair's movement on the 5-minute timeframe was very promising. However, there was not a single local level between the levels of 1.2674 and 1.2860, since the pair had not been in this price range for a year and a half. Therefore, unfortunately, not a single trading signal was generated during the day. Moreover, according to today's results, it is unlikely to be possible to put a large number of new levels on the chart. Usually they are built according to the peaks of individual days, but today we can only distinguish the low of the day at 1.2697, which is not far from the level of 1.2674. In general, trading may not be much more interesting tomorrow, since there are still very few levels near which signals can be formed. At the same time, we expect to see an upward correction, as the pair has lost more than 300 points in the last two days. This strong movement cannot remain without correction. Moreover, there are no new powerful grounds for continuing the fall of the pound right now.
How to trade on Tuesday:
The downward trend persists on the 30-minute TF. In recent weeks, the pair has been trading absolutely in a very diverse way: either in a flat, then on a "roller coaster", then according to "its own rules". However, if you move to a higher TF, then the downward trend is visible just fine. The pound still cannot even start a proper upward correction, and most factors continue to support the fall of the pound/dollar pair. However, the correction should still begin, but in general, the prospects for the pound still isn't great. On the 5-minute TF tomorrow, it is recommended to trade at the levels of 1.2674, 1.2697, 1.2860. When the price passes after opening a deal in the right direction, 20 points should be set to Stop Loss at breakeven. No important event or report scheduled for tomorrow in the UK, and only a minor report on durable goods orders in America. Thus, we will again expect an upward correction.
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.
