Analysis of Thursday's deals:
30M chart of the GBP/USD pair
The GBP/USD pair traded as strangely as possible on Wednesday. Firstly, it is unknown on what grounds the pound grew in the first half of the day. Moreover, the growth was not calm and confident, which could be attributed to a technical factor, but rather strong. Secondly, when the US inflation report was published, the pound simply fell by 50 points, forming a gap. Gaps in the currency market are an extremely rare thing that only forms between Fridays and Mondays. But for a gap to form in the middle of the working day, this is nonsense. Thus, the market itself does not seem to fully understand what should have been done with the pound/dollar. The inflation report in the US, which provoked a very painful fall of the euro, went almost unnoticed for the pound. And this is the third weird moment of the day. Volatility again exceeded 200 points. Thus, the pound retains a higher chance of growth against the dollar than the euro. It is not entirely clear on the basis of what factors, except for technical ones, it can show this growth ...
5M chart of the GBP/USD pair
The situation with trading signals on the 5-minute timeframe was in line with the movements on the 30-minute timeframe. An unreasonable growth of 240 points began at the European trading session and it was not possible to catch its beginning, since the pair did not fall to the level of 1.1024. Thus, the first buy signal was formed when the price overcame the 1.1200-1.1236 area, that is, when 85% of the upward movement was already left behind. Therefore, it was dangerous to work out this signal, especially an hour before the release of the inflation report. The same is true for the second signal. At the time of release of the report on consumer prices, the pound unexpectedly fell by 50 points. That is, beginners could open a short position 110 points below the last local high. In the case of the euro, a sell signal was formed half an hour before the release, and in the case of the pound, immediately at the time of release. Therefore, we believe that this signal should not have been worked out either.
How to trade on Friday:
On the 30-minute timeframe, the GBP/USD pair is leaning more and more every day to resume the long-term downward trend. Of course, the British currency has slightly more growth factors than the euro, but still there are not so many of them. The pound may rise on the basis of purely market desire to buy, but such a movement is completely impossible to predict. We still try to rely on specific factors when forecasting. On the 5-minute TF on Friday, it is recommended to trade at the levels of 1.0833, 1.0927, 1.1024, 1.1200-1.1211-1.1236, 1.1356, 1.1443, 1.1479. When the price passes after opening a position in the right direction for 20 points, Stop Loss should be set to breakeven. No interesting and important reports scheduled for Friday in the UK, while retail sales data will be released in the US, as well as the consumer sentiment index from the University of Michigan. Not the most important reports, so the reaction to them can be very weak.
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.
