Analysis of Tuesday's deals:
30M chart of the GBP/USD pair
The GBP/USD pair was also trading mainly flat on Tuesday, and the volatility of the day was 120 points. It seems to be quite a lot, but lately the pound has easily passed 200-300 points a day, so 120 looks frankly weak against this background. If there was no news for the euro and the dollar on Tuesday, then there was for the pound. It is hard to call it important, however, it became known that the unemployment rate fell by 0.1% to 3.5% (the same level was recorded in the US), and wages rose by 6% in August. In general, we can interpret this package of statistics as positive for the pound, however, during the day the pound rose in price very slightly. Thus, the reaction of the market, most likely, was, but it had little effect on the current overall technical picture. The pound also remains very low for itself, not least because of geopolitics and the strange actions of the British government and the central bank. It, of course, is in a more advantageous position than the euro, but still very low. It has certain chances for growth, and even greater than the euro, but we would say that a new fall would be a more logical scenario.
5M chart of the GBP/USD pair
In regards to Tuesday's trading signals on the 5-minute timeframe on Tuesday, the situation was not the most pleasant. In total, two signals were formed, one for short positions, the second for longs. However, a blatant flat was observed during the day, so the signals cannot be called strong. A short should have been opened on the first signal to overcome the level of 1.1024, but the price could not continue moving down and even go in the right direction for 20 points, so the position closed at a loss of about 30 points. Next, it was necessary to work out a buy signal to overcome the level of 1.1024, which could bring the newbies a profit of about 40 points. This position should have been closed manually, since the pair did not get even close to the nearest target level of 1.1200.
How to trade on Wednesday:
On the 30-minute timeframe, the GBP/USD pair is leaning more and more every day to resume the long-term downward trend. The price has already settled below the rising channel, many indicators on other timeframes also signal the resumption of the downward trend. Geopolitics and fundamentals remain on the dollar's side, so we are still more inclined towards the option that the fall will continue. On the 5-minute TF on Wednesday it is recommended to trade at the levels of 1.0833, 1.0927, 1.1024, 1.1200-1.1211-1.1236, 1.1356. When the price passes after opening a position in the right direction for 20 points, Stop Loss should be set to breakeven. Reports on UK GDP and industrial production will be released. These reports are capable of causing a market reaction, but it is unlikely to be strong. There will be nothing interesting in America on Wednesday.
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.
