Analyzing Tuesday's trades:
GBP/USD on 30M chart
The GBP/USD pair managed to both rise and fall again on Tuesday. The British currency had little support, although a sufficient amount of macroeconomic information was published. Unfortunately (or fortunately), British reports turned out to be too bland for the market to show a good movement. The unemployment level did not change, and the number of unemployment benefit claims matched the forecast. Only the wage report was resonant, showing a more significant slowdown than expected. However, this report alone was clearly not enough for a strong movement.
The US inflation report for November was published in the afternoon, which met expectations. Therefore, there was nothing for the market to react to here as well. Of course, for formality, it increased volatility, and the pair "flew" for two hours, but then the quotes returned to their original position, which is absolutely logical. Thus, the pound has been correcting for more than a week, maintaining an uptrend, as indicated by the trend line. We believe that the pair should fall further.
GBP/USD on 5M chart
On the 5-minute chart, the price moved more sideways than downward. The 1.2544 level was removed from the charts by the end of the day. However, the trading signals generated around it were quite good. First, the price bounced off this level and rose to the level of 1.2605. A bounce from it occurred during the release of US inflation data, so beginners could not wait for it and take the profit from the deal before. The sell signal around 1.2605 could be executed (although it was not safe), and the deal was also profitable. The last buy signal around 1.2544 could also be executed, but it did not bring any profit. Thus, it was possible to earn several profit.
Trading tips on Wednesday:
On the hourly chart, the GBP/USD pair continues its negative trading, which is both weak and uncertain. We believe that the pound should continue to fall as it simply has no fundamental and macroeconomic reason to justify an upward movement.
We recommend focusing on the sideways channel of 1.2502-1.2605. Rebounds or breakthroughs from these levels will make it possible for us to open corresponding deals. We expect volatility to gradually increase in the evening.
The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2605-1.2611, 1.2688, 1.2723, 1.2787-1.2791, 1.2848-1.2860. On Wednesday, the UK will release reports on GDP and industrial production. The GDP report is monthly, so it will have a minor impact on market sentiment. The same applies to industrial production. The key event of the day will be the FOMC meeting and its results, but it is scheduled for the evening. By that time, beginners may leave the market.
Basic trading rules:
1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.
2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.
3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.
4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.
5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.
6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.
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 represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.
The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.
Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.
Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.
