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FX.co ★ Trading plan for GBP/USD on May 17. Simple tips for beginners

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Forex Analysis:::2024-05-17T04:46:34

Trading plan for GBP/USD on May 17. Simple tips for beginners

Analyzing Thursday's trades:

GBP/USD on 1H chart

Trading plan for GBP/USD on May 17. Simple tips for beginners

GBP/USD also started a small bearish correction, but the upward trend remains intact. In fact, the dollar was quite lucky it didn't fall even more on Thursday. The US released several insignificant reports, and they turned out to be weaker than forecasts. Therefore, the dollar had grounds to fall on Thursday. On the other hand, there was no reason for the greenback to drop as much when the US inflation report was published. The CPI matched the forecasts, and inflation barely eased, so the report doesn't imply that the Federal Reserve will immediately begin to discuss rate cuts. We also want to remind you that the UK economy has hardly grown in the last two years. Unemployment in the UK is also increasing, as it is in the US. Therefore, it is also not possible to say that the dollar is declining due to weaker data.

GBP/USD on 5M chart

Trading plan for GBP/USD on May 17. Simple tips for beginners

Two quite decent trading signals were formed on the 5-minute timeframe. Firstly, the pair bounced off the level of 1.2691 and hit the nearest target at the level of 1.2648. Then, there was a rebound from the level of 1.2648, resulting in a rise of about 15 pips. Therefore, beginners could have made a small profit on both trades. We couldn't expect a higher profit when volatility was weak.

Trading tips on Friday:

On the hourly chart, the GBP/USD pair has great prospects for forming a downward trend, but the bullish correction remains intact. The fundamental backdrop continues to support the dollar much more than the British pound. The economic reports often fail to support the pound, but the market practically interprets all the news in favor of the British currency.

If we are talking about logical movements, then we expect the pound to fall on Friday. At the current stage, the upward movement seems to have stalled, so today we can expect a continuation of the downward retracement if the price breaches the level of 1.2648.

The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2541-1.2547, 1.2605-1.2611, 1.2648, 1.2691, 1.2725, 1.2787-1.2791. Today, there are no important events planned in the UK and the US, so there will be nothing to analyze. Most likely, we're in for another low-volatility day, and the market will probably try to extend the correction.

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.

Analyst InstaForex
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