Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair also began to adjust on Friday after leaving the descending channel a day earlier. In general, the pound has adjusted more strongly than the euro, but it has also fallen more over the past week. Despite the fact that the pair has left the descending channel, we cannot conclude that the downward trend is over and now the pound will grow. The reasons are the same as in the case of the euro/dollar pair. There are too many factors in favor of the dollar, and the market is openly set up to sell the British currency. Nevertheless, there are not so many reasons for a new fall for the pound. It should be recognized that all the factors that put pressure on the pound cannot do this forever. The market has repeatedly worked them out. Therefore, a correction is possible and even a strong correction as well. But we advise beginners to expect such a scenario, but do not try to "play ahead of the curve". It is simply dangerous to buy the pair on such a strong downward trend. There were practically no macroeconomic statistics and "foundations" on Friday. All the most interesting things will happen next week, when the meetings of the Bank of England and the Federal Reserve will be held. These events can change the mood of traders.
5M chart of the GBP/USD pair
On the 5-minute timeframe, the pair's movement on Friday was almost perfect. There was an upward trend movement throughout the day, and only two trading signals were formed. Moreover, the second one is already almost at the closing of the market, so, naturally, it should not have been worked out. Thus, it is worth considering only the first buy signal, which was formed when overcoming the level of 1.2502 early in the morning. After its formation, the price grew all day and managed to add almost 100 points in total. Taking into account the fact that the transaction opens above the buy signal and closes below the sell signal, it was possible to earn about 70 points on this transaction, which is an excellent result. This is exactly how trading should be conducted in the coming days, at least until Wednesday, when important fundamental information will begin to arrive at the disposal of traders. We trade, as before, by levels, keeping in mind the assumption that an upward correction may be strong enough, but we do not deny the possible new fall of the pair.
How to trade on Monday:
The downward trend still persists on the 30-minute TF. The pound has gone down more than 600 points only in the last six trading days, so an upward movement of 150 points may be a pullback, after which the downward movement will resume. The meetings of the Bank of England and the Fed next week may affect the mood of traders, but they will be held only on Wednesday and Thursday. You will have to trade on pure technique on Monday and Tuesday. On the 5-minute TF tomorrow, it is recommended to trade by levels 1.2409, 1.2477, 1.2502, 1.2601, 1.2674, 1.2697. When the price passes after opening the transaction in the right direction, 20 points should be set to Stop Loss at breakeven. There are no important events or publications scheduled for tomorrow in the UK again. In America, the calendar of macroeconomic events contains only the index of business activity in the field of production, which is unlikely to greatly affect the pair's movement under the current circumstances.
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.
