Friday Trade Review:
1H Chart of GBP/USD
On Friday, the GBP/USD pair also showed absolutely no interesting movement. Throughout the day, the pair was stuck between two areas: 1.3529–1.3543 and 1.3574–1.3590. On the hourly timeframe, an upward trend persists, but at this point, it's not possible to draw a local ascending trendline, and the market is in no hurry to develop the uptrend. The British pound remains very close to its highs of the past several years, and there are plenty of reasons for the US dollar to fall. Nevertheless, in recent weeks, we have observed low volatility, which is the main reason for the lack of solid trending movement. On Friday, relatively important reports were published in the UK, but they attracted no one's interest. July GDP remained unchanged, while industrial production decreased by 0.9%. These data could have prompted a decline in the British pound, but the market preferred not to react at all. The US consumer sentiment report could have triggered a drop in the dollar, and it did—by about 20 pips. The whole day was a sideways movement.
5M Chart of GBP/USD
On the 5-minute timeframe, four buy signals formed on Friday in the same 1.3529–1.3543 area. In each instance, the pair advanced 15–25 pips upward. Thus, it was extremely difficult to profit from any of these trades. Only in the first case did the price manage to reach the nearest target level of 1.3574, which was just 30 pips away. Flat is flat.
How to Trade on Monday:
On the hourly timeframe, the GBP/USD pair shows signs of a renewed uptrend, and on higher timeframes, the upward trend remains. As we have said before, we see no grounds for the US dollar to grow in the medium term, so we expect further gains for the British currency.
On Monday, the GBP/USD pair may try to continue moving north. However, at this time, it remains squeezed between the 1.3529–1.3543 and 1.3574–1.3590 areas, with market volatility quite low. There will be no important events on Monday, so volatility may again be very weak.
On the 5-minute timeframe, you can now trade around the following levels: 1.3102–1.3107, 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3413–1.3421, 1.3466–1.3475, 1.3529–1.3543, 1.3574–1.3590, 1.3643–1.3652, 1.3682, 1.3763. On Monday, there are no interesting events or reports scheduled in either the UK or the US. Thus, traders will have little to react to during the day, and the pair's movements may again leave much to be desired.
Core Trading System Rules:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- Stop Loss: Set a Stop Loss to breakeven after the price moves 20 pips in the desired direction.
Key Chart Elements:
Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.
Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.
MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.
Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.
Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.
