Analyzing Wednesday's trades:
GBP/USD on 30M chart
GBP/USD was also actively recovering on Wednesday after its fall on Tuesday. It would be more correct to say that it continued to recover because the pound started to rise on Tuesday. Thus, at the moment, the pair is exactly where it started its decline on Tuesday. Accordingly, the pound lost absolutely nothing. The nature of its fall on Tuesday is still unclear, but the pair risks returning to the 1.2008-1.2141 horizontal channel. More precisely, it is already there, but I still don't believe that the flat will resume, otherwise how do we explain Tuesday's powerful outburst of emotions in the currency market? Of course, we can "find" a million reasons why we saw the movement we saw. But it is impossible to clearly and precisely state the reason for such movements. Therefore, I believe that at this time, traders have "come to their senses" after the holidays. "Swings" are possible on Thursday. There was no fundamental and macroeconomic background in Great Britain on Wednesday.
GBP/USD on M5 chart
GBP/USD's movement looks almost exactly the same as the EUR/USD pair's on the 5-minute chart. The main growth happened during the Asian trading session and the beginning of the European one. Further, the pair was in a flat near the area of 1.2057-1.2079, and novice traders were very lucky that this area lay in the upper part of the flat, so false signals were not massive. In principle, the price did nothing but bounce from this area. Beginners could open one or two short positions on these signals, but both trades were most likely closed by Stop Loss at breakeven. Take note that a buy signal was formed near 1.1957 last night. Of course, it should not have been worked out at night, but when the European trading session opened, the price moved away from the formation point by only 13 points. Therefore, it was possible to open a long position that would bring about 50 points of profit. However, it was an absolutely ambiguous decision.
Trading tips on Thursday:
GBP resumed the downtrend on the 30-minute chart, but now it is in danger of moving inside the horizontal channel again. Thus, traders urgently need factors so it can sell. Unfortunately, there will be few of them on Thursday, or rather none at all. Will have to wait until Friday. On the 5-minute chart, it is recommended to trade at the levels 1.1863-1.1877, 1.1950-1.1957, 1.2008, 1.2057-1.2079, 1.2141, 1.2186-1.2205, 1.2245-1.2260. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. On Thursday, the UK is set to publish an index of business activity in the services sector for December, which is likely to fall below 50.0. This may help the US currency. In the US, the index of business activity in the services sector will also be published, and it is also likely to remain below the level of 50.0.
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.
