Analyzing Thursday's trades:
GBP/USD on 30M chart
GBP/USD was trading flat on Thursday. It moved along 1.2343 for the entire day, but still above the ascending trend line, which took a slightly different look on Wednesday to match what is happening in the market. So, at the moment, the uptrend remains, and crossing the trend line may not mean anything special just like last time. I still hope to see a strong bearish correction, but it should be recognized that the market is more focused on buying the British pound, not paying much attention to the fundamental and macroeconomic background. In any case, it would be better to trade on the 5-minute chart, where basically it does not matter what the trend is. The trend is important for overall understanding of what is happening in the market. On Thursday, there were no important reports or events in the UK and US. Therefore, the volatility of 45 pips is understandable.
GBP/USD on M5 chart
It doesn't not make much sense to talk about the trading signals, because all day long the pair traded exclusively sideways with low volatility. It was a bit unlucky that there were two levels in the trading area, which the price worked with pleasure all day long. Therefore, beginners could try to work out only the first two signals, because all of them were false anyway. The price could not pass even 20 points in the right direction, which would be enough for placing a Stop Loss, so the short position could be closed at any time.
Trading tips on Friday:
GBP/USD maintains an uptrend on the 30-minute chart. There are not many important and significant events this week, so it is very difficult to predict the pair's movement. In any case, the market currently trades more on the basis of its expectations rather than the "fundamentals" or macroeconomics. On the 5-minute chart, it is recommended to trade at the levels 1.2109, 1.2171-1.2179, 1.2245-1.2260, 1.2337-1.2343, 1.2387, 1.2444-1.2471, 1.2577-1.2597. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. On Friday, the UK is scheduled to publish a retail sales report, and in the US we have a few more speeches from Federal Reserve representatives. However, the market did not show much interest in the speeches of the Fed representatives, so the volatility may remain low on Friday.
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.
