Analyzing Thursday's trades:
GBP/USD on 30M chart
The GBP/USD pair also resumed its downward movement on Thursday. At first glance, there was no reason for this, as there were absolutely no publications in the UK (that is, in the first half of the day). And yet, the pair began to fall early in the morning. And at night, the price rebounded from the descending trend line, a little earlier - from the level of 1.2507. So there were at least two technical sell signals, and the downtrend persisted. I expect the pair to continue its downtrend in the medium term.
During the day, several representatives of the Bank of England also gave speeches, but there were no resonant statements. As I have already mentioned, there have been quite a few speeches, and none of them have elicited a clear market response since they didn't provide any new information. The British central bank continues to expect that inflation will be declining for the remainder of the year, but whether it will happen is a big question. Either way, after two months of illogical rise, the pound may continue to fall without the support of the fundamental background. The pound has long since exhausted and worked out all growth factors.
GBP/USD on 5M chart
There were two trading signals on the 5-minute chart on Thursday, and both require very serious explanations. We should start with the fact that it was not possible to catch the beginning of the pair's fall. When the price moves non-stop in one direction, signals can form at night or in the evening of the previous day. And I advise you not to carry trades over to the next day, as the market is usually flat at night. But now is an exception to the rule. We also added the 1.2448 level, and together a whole support area (now resistance) was formed, around which it is not very convenient to trade. It makes no sense to trade within it, and it is dangerous beyond its limits, as the potential loss is very high. In the end, when the price overcame this area, it was already late in the evening and there was no longer any hope for a strong fall. And by that time, the pair had already traveled an impressive distance downwards, so the best decision was not to open trades.
Trading tips on Friday:
On the 30-minute chart, the GBP/USD pair continues to fall, but it's unknown how long this will last. The trend line again supports bears and the US dollar, the price could not breach it. So far, everything is going according to plan, we have already said that we are expecting a strong fall of the pound. On the 5-minute chart, you can trade on the levels 1.2171-1.2179, 1.2245-1.2260, 1.2351-1.2367, 1.2434, 1.2507-1.2520, 1.2597-1.2616, 1.2659, 1.2697. 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, no important events or publications are scheduled in the UK, and Jerome Powell will speak in the US, which may provoke a market reaction.
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.
