Analyzing Friday's trades:
GBP/USD on 30M chart
On Friday, GBP/USD was trading near its local highs and maintained its uptrend, which is now expressed by the trend line. Volatility was low, only about 70 pips, but there were very few macroeconomic events. In the UK, the retail sales report for December was released, which was much below the forecasts. Therefore, a sluggish decline from the pound in the first half of the day was justified, but it did not have any impact on the overall trend and the technical picture. If we had seen the same movement without the report, it would not cause any questions, as such movements are called "market noise". So Friday was the "fresh" day, but GBP did not give up and keeps trading near highs. If the price settles below the trend line, a new round of corrective movement might begin next week. We believe that ahead of the meetings of the Bank of England and the Federal Reserve, the pair's direction may change.
GBP/USD on M5 chart
The movement was very similar to a flat, though it was not a flat. First, the pair fell to the 1.2337-1.2343 area and rebounded from it three times. Beginners could open only one deal at those signals, since the pair managed to go up more than 20 pips only after the third one. As a result, it rose to the nearest level of 1.2387, from which it bounced. At this point it was possible to close the longs with a profit of about 25 pips. All the subsequent signals should not be worked out, as the evening was coming near and the market was closing for the weekend. A small profit was obtained.
Trading tips on Monday:
GBP/USD maintains an uptrend on the 30-minute chart. Thus, until GBP crosses the trend line, I don't really expect the pound to fall, although it is still very likely. The market continues to often ignore the fundamental and macroeconomic background and trade as it deems necessary. Therefore, the pound does not always move logically and reasonably. 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. No important events scheduled for Monday in the UK and the US, so volatility may remain low and there may be no intraday trend movements.
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.
