Analyzing Thursday's trades:
GBP/USD on 30M chart
The GBP/USD pair was holding its own against the US dollar on Thursday. Trading within the same sideways channel, which is now visible on almost all timeframes. Thus, nothing noteworthy happened again. Volatility was 85 points, which is not that low, but the movements did not improve. There was nothing lined up for the UK, while the US released a secondary (in terms of significance) report on unemployment benefit claims, which had no impact on the pair's movement. Therefore, we saw classic movement within a sideways channel: since the pair reached the lower band, the movement to the upper one should follow, which is what we saw.
GBP/USD on 5M chart
Several trading signals were formed on the 5-minute chart. First, the pair bounced off the 1.2715 level but could not reach the nearest target by just a few points, so the long position closed at breakeven due to Stop-Loss. Then a sell signal was formed around the same level, but it was a false one, and beginners could get a small loss from it. The third signal around this level should have been ignored because the first two were false. Therefore, the next signal for processing was a consolidation above the 1.2748 level, afterwards the pair rose to 1.2787, bounced off it, and returned to 1.2748. These two trades could have earned about 40 pips of profit, which certainly covered the loss on the first trade and allowed beginners to keep a small profit.
Trading tips on Friday:
On the 30-minute chart, the GBP/USD pair is trading in a sideways channel. However, we insist that the pound fall, as we still believe it is overbought and unreasonably expensive. We already warned you that not all of this week's reports could support the dollar, so we may see confusing movements in the sideways channel. 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 Friday, the UK will release a retail sales report, and there's nothing in the US. I don't think this report can cause a reaction of more than 20-30 pips, so the flat will likely persist.
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.
