Analyzing Tuesday's trades:
GBP/USD on 30M chart
GBP/USD drifted higher at the end of the first trading day of the week; however, volatility was very weak. Therefore, traders should have questioned whether it was worth entering the market. We already warned you that there would be no news or reports, and even market activity this week. The first day has shown us that there's a very good chance of that happening. If the pair moves by only 30-40 pips each day, it will be challenging to expect profits from any signals.
The uptrend remains intact, but all of this week's movements can be disregarded and not considered in the overall technical picture. There is a high probability of a flat, meaning the pair may settle below the trendline, but it will not signify a change in trend. Therefore, we can draw conclusions next year as any change in trend is expected then.
GBP/USD on 5M chart
On the 5-minute chart, a buy signal was also generated, which turned out to be profitable as well. The price spent a long time "thinking" about what to do with the level of 1.2688, but eventually bounced off it and managed to rise by about 15 pips. The price did not reach the nearest target level, so the long position could be manually closed in the evening.
Trading tips on Wednesday:
On the hourly chart, GBP/USD has resumed and continued its uptrend despite the holidays. According to technical analysis, the uptrend remains intact; therefore, the British currency may continue to rise.
On Wednesday and throughout the current week, movements may be erratic or there could simply be a flat phase. Therefore, it will be quite difficult to expect high profits and strong signals. There are also 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 Wednesday, the event calendars in the UK and the US are empty. There will be no significant events, so a flat and low volatility may persist.
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.
