Analyzing Thursday's trades:
GBP/USD on 30M chart
The GBP/USD pair also traded higher on Thursday but showed much weaker growth than the EUR/USD pair. And by the end of the day, it started to fall. However, this decline isn't really worth mentioning since it doesn't mean anything at all. There's another thing we should look into. While the euro had grounds for showing another round of upward movement, the UK released data early in the morning that should have caused the pair to fall, not rise. UK GDP in February turned out to be weaker than forecasts, coming in at 0%, while industrial production contracted by 0.2% with forecasts at +0.2%. However, during the European trading session, the pound rose as if nothing had happened, which proves that the pound, along with the euro, are rising for no reason. So even if the macroeconomic background supports the dollar, the euro and the pound will still grow. From a technical perspective, everything is logical. The pair has overcome the descending trendline, so the pair will continue to rise.
GBP/USD on 5M chart
Trading signals on the 5-minute chart weren't good at all, as was the movement itself. The day's volatility was only 60 points, which is quite small for the pound and for profitable trading. All the signals were formed around 1.2520, which did not even participate in forming signals on Thursday. It was only added in the chart. The 1.2471 level was also adjusted to 1.2477, so we don't count the morning signal either. As a result, there were no signals, and beginners should not have entered the market. And this is very good, since the movements were no good.
Trading tips on Friday:
On the 30-minute chart, GBP/USD traded higher again, overcoming the trendline. I believe that this upward movement will also be baseless because the pound has been moving like this for several weeks: it strengthens even when there are no reasons for it. On the 5-minute chart, you can trade on the levels 1.2245-1.2260, 1.2343-1.2360, 1.2396, 1.2444, 1.2477, 1.2520, 1.2577-1.2597-1.2616, 1.2659-1.2674. When the price passes 20 points in the right direction after the trade is opened, you can set a stop loss at breakeven. No important events scheduled for Friday in the UK. The US will release reports on industrial production, retail sales, and the University of Michigan's consumer sentiment index. I believe that the market will only react to such data if the results significantly differ from forecasts.
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.
