Analyzing Tuesday's trades:
GBP/USD on 30M chart
The GBP/USD pair surprisingly showed some trending movement on Tuesday. Volatility was low, but the pair did not stand still like EUR/USD. It covered about 60 points from the day's low to the high. As we have already mentioned, US trading platforms were closed on Tuesday for the 4th of July holiday. Therefore, we expected the British pound to be relatively muted alongside no significant macro data. However, the pair managed to cross the upper band of the descending channel, breaking the downtrend. So now GBP can start a new cycle of its baseless growth.
As mentioned, there were no significant events or economic reports lined up for the UK, so it's quite hard to say why the British currency appreciated. However, we have long been used to the fact that the pound can grow even on flat ground for no reason.
GBP/USD on 5M chart
The movement was weak, but there were a sufficient number of trading signals. Two buy signals formed around the level of 1.2690 during the European trading session, which duplicated each other, after which the pair rose to the nearest target of 1.2721, overcame it and stayed above it until the end of the day. Thus, beginners could have opened a long position in the morning, which should have been manually closed in the evening. No sell signals were formed.
Trading tips on Wednesday:
As seen on the 30M chart, the pair has broken the downtrend, which isn't surprising. The pound manages to rise even on days when there is no fundamental background. Therefore, for purely technical reasons, the pound can continue to rise this week, but much will depend on the macroeconomic background from America. However, with the current market sentiment, this may not even prevent the pound from extending upward movement. 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 Wednesday, the UK is set to release its services PMI in the second estimate for June, and we have the minutes of the last FOMC meeting in the US. The first event is insignificant, the second is scheduled for late in the evening.
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.
