Analysis of Wednesday's Trades:
1H Chart of the GBP/USD Pair
The GBP/USD pair rose sharply on Wednesday, with the move not linked to any macroeconomic reports. The price broke through the descending trendline and formed a new ascending trendline. Thus, the trend for the British pound sterling has shifted to an upward trajectory, which can be considered solid. The only question is how long it will last. Recall that in recent weeks, the pound has faced numerous challenges, but every difficult period eventually comes to an end. The macroeconomic and fundamental backdrop for the dollar is no better, so we do not expect a strong strengthening of the American currency. However, there are very few scheduled events and reports this week, so beginner traders will have to pay more attention to technical factors. Currently, the technical analysis indicates growth for the British currency.
5M Chart of the GBP/USD Pair
On the 5-minute timeframe, five notable trading signals were formed on Wednesday. Early in the night, the pair perfectly bounced from the area of 1.3484-1.3489, although this signal was difficult to capitalize on for understandable reasons. During the European trading session, the pair also bounced perfectly from the level of 1.3529, then from the area of 1.3484-1.3489, and once again from 1.3529, before eventually breaking through the area of 1.3484-1.3489. Thus, traders had the opportunity to open at least 4 trades during the day, 3 of which were profitable.
How to Trade on Thursday:
On the hourly timeframe, the GBP/USD pair broke the downward trend and is ready for growth. There are no global reasons for medium-term dollar growth; therefore, we expect the global upward trend from 2025 to continue in 2026, which could push the pair to the 1.4000 mark at a minimum. In recent weeks, the situation has often played against the British currency, and the market has frequently ignored negative news from America.
On Thursday, beginner traders may consider holding long positions following a buy signal from the 1.3529-1.3543 area, targeting 1.3643-1.3652. A price consolidation below the area of 1.3529-1.3543 will allow for opening short positions with a target of 1.3484-1.3489.
On the 5-minute timeframe, levels to consider include 1.3319-1.3331, 1.3365, 1.3403-1.3407, 1.3437-1.3446, 1.3484-1.3489, 1.3529-1.3543, 1.3643-1.3652, 1.3695, 1.3741-1.3751, 1.3814-1.3832, 1.3891-1.3912, and 1.3975. On Thursday, there are no significant events or reports scheduled in the UK, and only a jobless claims report is expected in the U.S. The upward trend is now in place, but volatility today may be low.
Main Rules of the Trading System:
- The strength of the signal is determined by the time it takes to form (rebound or breaking through the level). The shorter the time, the stronger the signal.
- If two or more trades were opened around a particular level based on false signals, all subsequent signals from that level should be ignored.
- In a flat market, any pair can generate numerous false signals or no signals at all. In any case, it is best to stop trading at the first signs of a flat.
- Trades are opened during the time period between the start of the European session and until the middle of the American session, after which all trades should be manually closed.
- On the hourly timeframe, signals from the MACD indicator should ideally be traded only when there is good volatility and a trend confirmed by a trend line or channel.
- If two levels are too close to each other (ranging from 5 to 20 pips), they should be considered as a support or resistance area.
- After moving 20 pips in the correct direction, it is advisable to set the Stop Loss to break-even.
What's on the Charts:
- Support and resistance levels are targets for opening buy or sell trades. Take Profit levels can be placed around them.
- Red lines indicate channels or trend lines that reflect the current trend and indicate the preferred direction for trading now.
- The MACD indicator (14,22,3) – the histogram and signal line – serves as a supplementary indicator that can also be used as a source of signals.
- Important speeches and reports (always found in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or it is advised to exit the market to avoid a sharp price reversal against the preceding movement.
- Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing sound money management are the keys to long-term trading success.
