Analyzing Tuesday's trades:
GBP/USD on 30M chart
GBP/USD tried to continue its downward movement but failed in doing so. The pair fell to 1.2008 but could not move further. Nevertheless, at least the pound is showing a bit of a trend so it is possible to trade, which is already a good thing. As I already mentioned, I am also waiting for GBP to continue its downward movement because it rose too much during the last months, which does not correspond to the number of its supporting factors. The fact that the price managed to settle above the descending trend line does not say anything because the movement in the days before the New Year can often slip into a flat. Now everything depends on the 1.2008 mark. Whether GBP manages to cross it or not.
GBP/USD on M5 chart
On the 5-minute chart, you can clearly see that the pair did not stand in one place. There were two signals. First, the price rebounded from 1.2079, after which it managed to go up only 16 pips. Therefore, the long position closed in a loss when the price settled below the 1.2064-1.2079 area. The same sell signal could be worked using a short position. There were no more signals until the evening, so the position should have been closed manually. The profit on it was about 27 pips, which at least exceeded the loss on the first deal.
Trading tips on Wednesday:
On the 30-minute time chart, GBP maintains a downtrend, even though the trend line has lost its relevance. I still expect a flat to start this week, but while there is no flat, you can still try to trade the pair. On the 5-minute chart, it is recommended to trade at the levels 1.1793, 1.1863-1.1877, 1.1950-1.1957, 1.2008, 1.2064-1.2079, 1.2141, 1.2186-1.2205. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. There are no important events or reports in the UK or US. Thus, there will be nothing to react to and there's still a high probability of a flat.
Basic rules of the trading system:
1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
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 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, and 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 patterns (channels and trendlines).
Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.
