Analyzing Friday's trades:
GBP/USD on 30M chart
GBP/USD extended its bearish correction on Friday, which has already become a trend, although it is still very weak, with volatility remaining low and traders reluctant to sell the pair. Demand for the US dollar remains low, although on Friday, the market had all the necessary reasons to open short positions. At some point, traders did open them, but it didn't last long. The US data provoked a slight strengthening of the US currency, which quickly disappeared. The NonFarm Payrolls came out within forecasts, and the unemployment rate fell again and came in at 3.5%. In my opinion, the US dollar could have strengthened much more, but it didn't. However, at least now there is a downward trendline that gives hope for further movement to the downside, which is the most logical scenario.
GBP/USD on 5M chart
The trading signals on the 5-minute chart were not the worst. They could have been much worse. First, two sell signals were formed near 1.2444, after which the price fell to the nearest target level of 1.2396 and bounced off it. Of course, if it were not for the US reports, the pair would most likely have stayed in one place all day, but both signals were formed before the US data were released, so they could be worked out with one short position. This made it possible for novice traders to earn about 25 pips. The bounce from 1.2396 could also have been worked out, but with a long position. This would have earned you another 10-15 pips, and it was better to close it manually closer to the evening.
Trading tips on Monday:
On the 30-minute chart, GBP/USD took a small break after a sharp rise. The 1.2440 level did not live up to expectations and the pound easily crossed it, so the pair can continue its bullish movement. However, there is still a downward trend line, so we may observe a few days of slight decline. The trend line is so weak that it will not be difficult to overcome it. On the 5-minute chart, it is recommended to trade at the levels 1.2143, 1.2171-1.2179, 1.2245-1.2260, 1.2343-1.2360, 1.2396, 1.2444-1.2471, 1.2577-1.2616, 1.2659-1.2674. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. There is absolutely nothing planned in the UK and the US for Monday. Volatility may be very low again, and there may be no trend movement within 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.
