Analyzing Monday's trades:
GBP/USD on 30M chart
The GBP/USD pair also showed chaotic movements and low volatility on Monday. The movements were almost identical to the EUR/USD pair. In the morning, the UK released its manufacturing PMI, it wasn't the strongest but still not as disastrous as in the European Union. In the second half of the day, the pound recovered, it didn't bother to wait for the US PMIs, which also turned out to be weak. In general, we can consider the movement as logical if only it coincided with the time of release of the reports. But in any case, there was no intraday trend.
Nevertheless, the pair stayed within the downward channel, although it tried to leave it through the upper band. Therefore, the downtrend persists, and we are entitled to expect the pound's decline, which would be the most logical development of events. But it is difficult to say in which direction the pound will head.
GBP/USD on 5M chart
It was inconvenient to trade on Monday, which is perfectly visible on the 5-minute chart. The picture is almost identical to the euro even on this chart. After forming sell signals at the beginning of the European session, the pair almost reached the nearest target level, just 4 points short. But beginners had plenty of time to close this deal manually, as the pair moved sideways for the rest of the session. Therefore, you could make a small profit on the deal. But the sell signal is still considered false, and there was no buy signal around the 1.2653 level.
Then there was another false buy signal around the 1.2690 level, after which the pair went up 23 points. It was possible to set a Stop Loss for this deal. The last two signals should not have been worked out, as the first two were false.
Trading tips on Tuesday:
As seen on the 30M chart, the pair has been falling for eleven trading days. The downward channel is still relevant, and the price is currently near the upper band of the channel. We believe that the pound still lacks strong reasons to rise, so a bounce from this boundary and a resumption of the decline would be more logical. However, if the price consolidates above the channel, this would indicate a shift to an uptrend. The key levels on the 5M chart are 1.2457, 1.2499, 1.2538, 1.2597-1.2605, 1.2653, 1.2690, 1.2721, 1.2757, 1.2801, 1.2860, 1.2913, 1.2981. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. On Tuesday, no important events lined up in the UK or the US. We should brace ourselves for another low-volatility day.
Basic trading rules:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
