Analyzing Thursday's trades:
GBP/USD on 30M chart
The GBP/USD pair also showed illogical movements on Thursday. In fact, the pair traded more sideways than up or down throughout the day, but such behavior isn't surprising. During the day, only two reports were published in the US - on GDP for the first quarter and on unemployment benefit claims. Considering that the pair's volatility for the entire day was 63 points, it is obvious that a strong reaction to at least the first resonant report did not follow. And as I have mentioned, the US dollar should have fallen after the GDP report was published, as the indicator turned out to be much weaker than forecasts. As for unemployment benefit claims, there is nothing to say about this report, as it rarely causes weak movements. There were no events in the UK this week. The pair continues to be within a horizontal channel, so movements in different directions are absolutely normal.
GBP/USD on 5M chart
Trading signals on the 5-minute chart were absolutely disastrous, since the pair was flat all day. All four signals were formed around the 1.2466-1.2477 area, and all four turned out to be false. Thus, beginners could only try to execute the first two. In both cases, the pair could not even move 20 points in the correct direction, enough to set Stop Loss to breakeven, so both trades resulted in a small loss. Unfortunately, it was quite an unsuccessful day, but it is good that such days do not happen often. The last two signals should not have been executed, as the first two were false.
Trading tips on Friday:
On the 30-minute chart, GBP/USD seems to be just moving sideways. Thus, the flat is added to the illogical movements. A simply fabulous layout for traders of any level. Macro data are processed illogically, but in any case, the pair is within a horizontal channel. On the 5-minute chart, you can trade on the levels 1.2171-1.2179, 1.2245-1.2260, 1.2343-1.2360, 1.2396, 1.2466-1.2477, 1.2507-1.2520, 1.2577-1.2597-1.2616. When the price passes 20 points in the right direction after the trade is opened, you can set a stop loss at breakeven. On Friday, there are no important events planned in the UK again, and the US will publish reports on personal income and expenses, as well as the personal consumption expenditure index. Absolutely secondary data, a reaction to them is possible, but it will not change anything, as movements are illogical and within a horizontal channel.
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.
