Analysis of Monday's deals:
30M chart of the GBP/USD pair
The GBP/USD pair also continued its upward movement on Monday, which could not be provoked by any events, because there were none on Monday. Therefore, the conclusion is the same: either the pair moved on "bare" technique, or based on the events of the past week, of which there was a huge abundance. One way or another, the downward trend line remains for the pound, which also preserves the prospects for the pair to fall. At the moment, the price has risen exactly to it, so a rebound from it will lead to a new fall. We have already said that the pound's growth on Friday was illogical, and Monday's growth is even more so. Of course, you can always come up with reasons why this or that pair is growing. And in the case of the pound, we can say that the Bank of England meeting was also worked out by the market illogically. However, two full days have passed since then. Theoretically, it is possible, in practice it is hard to believe. The key point now is the trend line, as the price just stopped upon reaching it. In terms of fundamentals or macroeconomics, it is now quite difficult to say in which direction the pound will move. Therefore, we focus on the trend line.
5M chart of the GBP/USD pair
The movement on the 5-minute timeframe was bad. The market opened with a gap down, but closed it by the middle of the European trading session. We saw a sharp and strong growth of the pair within just an hour by 170 points. Enviable volatility for a day with an empty calendar. But when this movement ended, a blatant flat began. Such changes in the market mood did not contribute to conveniently trading the pair. The first trading signal to buy was formed near the level of 1.1356. Further, the price rose to the area of 1.1443-1.1479 and traded in it until the end of the day. The level of 1.1443 was corrected to 1.1435 by the end of the day. The long position could be closed after two bounces from the level of 1.1479; as a result, it brought a profit of about 90 points. An excellent result, considering the circumstances. These signals should not have been worked out with short positions, since the pair was obviously in a flat at that time.
How to trade on Tuesday:
The pound/dollar pair maintains a downward trend on the 30-minute time frame, but on Friday and Monday it rose by 330 points. We believe that tomorrow the market may start selling the pair, as there are no good reasons to continue buying the pound. However, breaking the trend line will open the way for the price to the level of 1.1648. On the 5-minute TF on Tuesday it is recommended to trade at the levels 1.1200-1.1211-1.1236, 1.1356, 1.1435, 1.1479, 1.1550, 1.1608, 1.1648. 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 reports or other events scheduled for Tuesday in the UK and US. However, even Monday showed that the market continues to trade very actively, and the pair moves volatilely. We can observe a similar picture on Tuesday.
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.
