Analyzing Tuesday's trades:
GBP/USD on 30M chart
GBP/USD tried to start a new round of downward movement, but so far it is working very badly. After the pound rose on Friday and Monday, I repeat, a bearish correction is necessary. Soon we will say this in every article, and on all charts. But this is the reality. The pound rose when the dollar's growth would have been more logical. Yesterday, there was no macroeconomic and fundamental background, and Federal Reserve Chairman Jerome Powell's speech did not provide any new information. On the 30-minute chart, the whole movement looks like a "swing". The pound was flat for several weeks, now we can say that the movement has transformed, but not into a trend. So, tomorrow or the day after tomorrow it might start falling and come back to the starting points of Friday morning. There is no trend line or channel right now.
GBP/USD on M5 chart
When we analyzed the 5-minute chart, I wondered if the levels were too close to each other and if there were too many of them. But Tuesday showed that they work out very well. There were several good signals in the 1.2141-1.2186 range, but it was difficult to make profit from them, because the price was near the target level. It was possible to earn a couple of dozens of points, but no more. Even when the price was below 1.2141, the downward movement didn't last long, so the short position was closed at the nearest buy signal, hence in the same range of 1.2141-1.2186. The day was profitable, which is already quite good, considering the nature of the pair's movement on Tuesday.
Trading tips on Wednesday:
On the 30-minute chart, GBP/USD went up again last Friday, which does not correspond to the macroeconomic background and was available for traders. Therefore, I don't think that the pair's current growth is logical and we are waiting for a new round of decline. Also, this week the market may realize that it was unfair for the dollar to fall on Friday and that they started buying it for no apparent reason. On the 5-minute chart, it is recommended to trade at the levels 1.1950-1.1957, 1.2008, 1.2057-1.2079, 1.2141, 1.2186-1.2205, 1.2245-1.2260, 1.2337-1.2343, 1.2371. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. No important events scheduled for Wednesday, neither in the UK, nor in the US. Volatility may remain low and there may be no trend movement. At the same time, we will wait for a new round of downward movement, but it does not mean that the pair will pass 100-150 points down during the day.
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.
