Analyzing Tuesday's trades:
GBP/USD on 30M chart
On Tuesday, the GBP/USD pair traded in sync with the EUR/USD pair again. We saw the same decline, which had no fundamental and macroeconomic basis. While the euro had at least formal reasons to move this way, since there were several speeches by European Central Bank representatives on Monday and Tuesday, the pound had no reason to rise on Monday and fall on Tuesday. However, the movements haven't really had any logic behind it for a month and a half, so we can only observe what is happening.There was no trend line, trend, or logic.
GBP/USD on 5M chart
There were good trading signals on the 5-minute chart, as a trend movement was observed throughout the day. Unfortunately, the first buy signal around the 1.2477 level turned out to be false, and the price could not move in the right direction by even 20 points. Therefore, the long position was closed at a loss when the pair fell below the 1.2466-1.2477 area. This consolidation was also a sell signal, which should have been worked out with a short position. Later, the price dropped to the nearest target level of 1.2396, which it could not overcome. Therefore, at this point, shorts should have been closed with a profit of about 50 points. A loss of about 30 points was made on the first position. It's a pity, but a small profit is still better than a loss. Volatility was over 120 points, which gives hope for more active movements during the week.
Trading tips on Wednesday:
On the 30-minute chart, the GBP/USD pair seems to have already completed the bearish correction, which turned out to be too weak. I still believe that the pound should sharply fall by at least several hundred points, but the market still refuses to sell. It does not want to trade, adhering to any trend or following the trivial logic of fundamental and macroeconomic events. On the 5-minute chart, you can trade at levels 1.2171-1.2179, 1.2245-1.2260, 1.2343-1.2360, 1.2396, 1.2466-1.2477, 1.2520, 1.2577-1.2597-1.2616. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. On Wednesday, no important events are planned in the UK again, and in the US, a report on durable goods orders will be published. However, the market has been showing for two days that there is no logic behind its movements, and it can trade quite volatile and in a trend even without events and reports.
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.
