Analyzing Monday's trades:
GBP/USD on 30M chart
The GBP/USD pair traded relatively calmly on Monday. The volatility was 85 pips, which is not too high nor too low. Throughout the day, the pair changed direction several times but maintained its downtrend despite breaking the descending trendline. The pair continues to fall but is losing momentum ahead of the Federal Reserve meeting. It has yet to breach the 1.2801 level, and it seems the pair is preparing for a bullish correction.
The UK also released manufacturing and services PMIs. They were worse than forecasts and worse than June's values. However, they were not as bad as the European or German PMIs. The pound fell in response to both the European and British data. The US PMIs were not as significant for the market, and their values were contradictory. For example, there was growth in the manufacturing sector but a decline in the services sector. As a result, the dollar rose by 30 pips. Therefore, practically all the reports supported the dollar on Monday.
GBP/USD on 5M chart
There were several trading signals on the 5-minute chart, but they were not the best ones. Initially, the pair bounced off the 1.2860 level, but it was better to close this trade manually before the release of the EU and UK reports as setting a Stop Loss was not possible by that time. Then a sell signal followed in the area of 1.2848-1.2860, but there was no opportunity to react to it in time. Therefore, beginners could only take advantage of the rebound from the indicated area at the opening of the US session, as the pair fell to the 1.2801 level. The profit from this trade was about 25 pips. The bounce from the 1.2801 level brought another 15-20 pips of profit, but in general, it was not an ideal day to trade.
Trading tips on Tuesday:
On the 30-minute chart, the GBP/USD pair extends its downward movement. We believe that the downtrend should take place in the medium term, but a bullish correction is also possible. The pound is still heavily overbought and has no grounds for further growth. The key levels on the 5M chart are 1.2653, 1.2688, 1.2748, 1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, 1.3043, 1.3107, 1.3145. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Tuesday, no reports or events lined up in the UK or the US. Volatility may fall, and there may be no intraday trend.
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.
