Analyzing Monday's trades:
GBP/USD on 30M chart
On Monday, the GBP/USD pair showed everything that was lacking on Friday. On Friday, the UK and the US released mixed reports. In the sense that one supported the pound and the other the dollar. Therefore, we didn't really see either a rise or fall of the pair. On Monday, the situation was the opposite: no reports, but a strong downward movement followed by an equally strong upward one. In general, at the end of the day, the pound neither appreciated or depreciated, but a weak downtrend can still be traced. This week, due to British data, the pair may trade more volatile and even show trends. Important reports will be released on Tuesday. We insist that the pound should only show a downward movement, and the last two weeks have shown that bulls are currently not eager to buy the pound.
GBP/USD on 5M chart
A lot of trading signals were formed on the 5-minute chart. During the European session, they were unfortunately weak, as they were formed only between the levels of 1.2688 and 1.2215, a distance of 27 points. Obviously, it was difficult to count on profit, but there could be no losses on these trades either. The first profitable signal was formed at the opening of the US session when the pair overcame the 1.2688 level downwards. The pair eventually dropped to the 1.2620 level, but it was not on the charts. And the pair did not reach the previous level at 1.2605. Therefore, as in the case with the euro, the short position had to be closed just above the 1.2653 level when forming a buy signal. You could open long positions on this signal, which also turned out to be profitable. In total, about 50 points.
Trading tips on Tuesday:
On the 30-minute chart, the GBP/USD pair is trying to extend the downtrend. We insist that the pound fall, as we still believe it is overbought and unreasonably expensive. Different reports will be released this week, and not all of them will entirely support the US currency. However, in general, the bearish mood should persist. The key levels on the 5M chart are 1.2499, 1.2538, 1.2605-1.2620, 1.2653, 1.2688, 1.2715, 1.2748, 1.2787-1.2791, 1.2848-1.2860, 1.2913. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Tuesday, the UK will release important reports on wages, unemployment benefit claims, and unemployment. The US will release its retail sales report.
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.
