Analysis of Tuesday's deals:
30M chart of the GBP/USD pair
The GBP/USD pair was also trading down on Tuesday, but in the afternoon it still found grounds to stop another fall and remain within the framework of a weak upward trend. There is still no trend line or ascending channel, as the trend is very weak, and corrections are so frequent that it simply does not make sense to consider this movement as a trend. Moreover, the euro has already collapsed on Tuesday, and the pound, as we all remember, loves to repeat the euro's movements. Thus, we would not be at all surprised if the pound also collapses in the near future. There was not a single important event or publication in the UK today, too. The country is preparing for the final elections of a new prime minister, so almost the entire information space is occupied by this particular topic. It is very easy to say why the pound fell on Tuesday morning, but it is very difficult to say why it grew in the afternoon. However, we would not conclude that there was a correlation between the euro and the pound. If it does happen, it will only happen next week, when the Bank of England holds its meeting and raises its rate. In general, we believe that the pound can and should resume its fall this week, but it may be weaker than the euro's fall.
5M chart of the GBP/USD pair
The movement during the day was not one-sided on the 5-minute timeframe, however, the trading signals were better than those for the euro. The first buy signal in the form of a price rebound from 1.2033 turned out to be false. After its formation, only 11 points were able to go up, so even beginners could not set Stop Loss to breakeven. This was followed by a correct signal to sell - consolidating below the level of 1.2033, afterwards the pair collapsed to the target level of 1.1967. It rebounded from this level, forming a buy signal, according to which it was necessary to leave short positions and open long ones. Profit on this deal amounted to at least 33 points. The long position also made money, as the price returned within a few hours to the level of 1.2033 and even overcame it, but a little later it went below this level. Precisely for this consolidation, it was necessary to close longs in profit of about 40 points. Thus, by the end of the day, the beginners were able to get a good profit.
How to trade on Wednesday:
The GBP/USD pair continues to try to form a new upward trend on the 30-minute time frame after breaking the uptrend line. However, the movement is now incomprehensible, unstable and very similar to a flat. Thus, just in case, we recommend sticking to a cautious trading style. Moreover, the Federal Reserve will raise its key rate on Wednesday, which means that the market can get rid of the pound and buy the dollar. On the 5-minute TF on Wednesday, it is recommended to trade at the levels 1.1807-1.1827, 1.1898, 1.1967, 1.2033, 1.2106, 1.2170. When the price passes after opening a deal in the right direction for 20 points, Stop Loss should be set to breakeven. Again, no major events or reports scheduled for Wednesday in the UK. Thus, traders can only pay attention to the report on orders for durable goods in the US during the day. But this report is unlikely to affect the pair's movement, since the results of the Fed meeting will be announced in the evening and traders, it seems, have already begun to work them out.
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 US 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.
