Analysis of Monday's deals:
30M chart of the GBP/USD pair
The GBP/USD pair traded even worse than the euro/dollar on Monday. The day started with a gap of 100 points up. Further, during the day, the price repeatedly changed the direction of movement, sometimes every half an hour or an hour. Thus, it was very difficult to trade the pair. We also note that business activity indices in the UK also turned out to be lower than expected and worse than previous values, as well as indices in the US or the European Union. Therefore, the pound also fell in the morning, and in the afternoon, the dollar was already falling. But we repeat: the price constantly changed the direction of movement during the day. As in the case of the euro, it is now quite difficult to say what the trend is in the market. The pound sterling consolidated below the rising trend line, then resumed growth, but at the same time could not overcome the last local high. The situation is very confusing, so be very cautious! Inadequate movements are observed now for the pound/dollar pair, so this should be taken into account when opening any positions.
5M chart of the GBP/USD pair
You can clearly see on the 5-minute timeframe that the price constantly changed direction during the day. We got such a "fence" for ourselves. It was lucky that only three trading signals were formed, which were much easier to beat than a lot of euro signals. The first buy signal turned out to be false when the price broke the level of 1.1356. Half an hour later, quotes settled below the level of 1.1356, and traders received a loss of 25 points. One should also open a position at the signal to sell, which turned out to be more successful. The price immediately returned to the level of 1.1356, rebounded from it and no longer formed signals, so traders could remain in a short position until the very evening and close it manually. The profit on it amounted to about 40 points and completely covered the loss on the first position, leaving beginners with a small profit.
How to trade on Tuesday:
The pound/dollar pair is trying to start a new downward trend on the 30-minute time frame, but so far it is trading more in different directions. It is not at all clear what to expect from the pound now, since the fundamental background is too strong and too diverse, it is very difficult to understand how the market will interpret and work it out. Inadequate and unpredictable movements can be observed this week all the time. On the 5-minute TF on Tuesday it is recommended to trade at the levels of 1.0927, 1.1061, 1.1200-1.1211-1.1236, 1.1356, 1.1443, 1.1479, 1.1550. When the price passes after opening a position in the right direction for 20 points, Stop Loss should be set to breakeven. There are no major events planned for Tuesday in the UK and the US, so there will be nothing to react to. However, the pound's volatility remains quite high, and movements can remain very complex and fence-like.
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 positions 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 positions are opened in the time period between the beginning of the European session and until the middle of the US one, when all positions 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.
