Analyzing Friday's trades:
GBP/USD on 30M chart
GBP/USD also edged up on Friday. If the euro had no grounds for growth, the pound had even less, because the UK released an important GDP report for the third quarter, which turned out to be weaker than forecasts. Nevertheless, the pair did not fall. Despite the fact that the pound has been correcting lately, it also manages to rise within this correction when it shouldn't do so. The price is still above the ascending trendline, so there are no signs of the trend ending at the moment.
Therefore, we still expect a strong and pronounced decline from the British currency, but there are currently no signs to change the existing trend to a downtrend. The pair may fall once it overcomes the trendline. There will be no macroeconomic and fundamental background in the upcoming week, but this does not mean that the pair will spend the entire week in a flat. Most likely, this will be the case, but still, the market will be "thin" (with a small number of participants), so each major deal can move it a considerable distance.
GBP/USD on 5M chart
On the 5-minute chart, movements were quite chaotic, and there was no logic behind it. During the European session, GBP/USD moved along the level of 1.2688, and the price only managed to break away from this mark by the end of the session. Traders could execute this buy signal, but at the beginning of the US session, the price settled below the level of 1.2725, so it was necessary to leave long positions. Further, we did not see any clear signals, so the best solution was not to enter the market. The profit from the trade was 10-15 pips.
Trading tips on Monday:
On the hourly chart, GBP/USD has resumed and continued its uptrend, but it is difficult to answer why the pair is moving this way. The British pound previously had specific reasons to rise, but it no longer has any of those. The pound is trading illogically again, but according to technical analysis, the uptrend persists.
On Monday and throughout the week, movements can be quite chaotic or simply flat. Therefore, it will be very difficult to expect high profits and strong signals. There are no important reports or events that could help the pair move more actively and in a trend.
The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2544, 1.2605-1.2611, 1.2688, 1.2725, 1.2787-1.2791, 1.2848-1.2860, 1.2913. On Monday, the event calendars in the UK and the US are empty. There will be no important events, and many platforms will be closed for Christmas.
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.
