Analyzing Friday's trades:
GBP/USD on 30M chart
GBP/USD showed a "classic swing" on Friday. The price changed its direction several times and some reversals can even be associated with macro data. Reports on UK GDP and industrial production for the same month were released on Friday morning. If industrial production was in line with the forecasts, the GDP unexpectedly showed growth, although most experts predicted a fall by 0.1-0,2%. Therefore, the pound rose in the morning, but just briefly. Also, there was an ascending trend line, which had three pivot points and were in perfect locations. The 1.2141 level was moved to 1.2109. During the week, there was more of a sideways movement than a trend, which is perfectly visible in the chart above. I believe that, from a technical perspective, a correction is still more likely than continued growth. But next week's fundamentals and macroeconomic background could be the formal reasons for the market to buy the pound again, not the dollar.
GBP/USD on M5 chart
There were quite a lot of trading signals on Friday. Unfortunately, the first sell signal turned out to be false and it resulted in a loss of about 40 pips. The situation eventually improved and beginners were able to offset the loss. The buy signal to cross the 1.2186-1.2205 area made it possible to earn about 20 pips since the price reached 1.2245, rebounded from it, and created a sell signal. You could earn about 20 pips more on this signal since the price crossed that area, but then returned to it and even tried to go higher. It was around the time the shorts should have been closed. The profit on them could have been much higher, but taking into account the "swings" during the day, the fact that there were no losses is already a great thing.
Trading tips on Monday:
On the 30-minute chart, GBP/USD maintains an uptrend, but settling below the trend line may change it to a downtrend. We will receive reports next week, which can support both the dollar and the pound, but once again the market may only "see" reports in favor of the pound. From a technical perspective, a fall is more likely, but there are no appropriate signals. On the 5-minute chart, it is recommended to trade at the levels 1.1950-1.1957, 1.2008, 1.2057-1.2079, 1.2109, 1.2186-1.2205, 1.2245-1.2260, 1.2337-1.2343. 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 Monday, neither in the UK, nor in the US. Thus, volatility may be low and price may continue to move mostly sideways.
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.
