Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair bounced off the level of 1.3460 on Tuesday and began a new round of upward movement. Recall that the day before, the price settled below the upward trend line, thus breaking it. Therefore, the upward trend should have reversed at this point. However, on Tuesday the price resumed its upward movement and once again reached the level of 1.3549, which it could not overcome. Thus, tomorrow the pound may start a new round of decline, because, nevertheless, we are leaning towards the fact that the upward trend is over. However, if the price still overcomes the 1.3549 level, then a new trend line or rising channel will have to be built. Today's macroeconomic background was as weak as possible. The UK Manufacturing PMI (the first tick in the chart below) had no effect on the pair's movement. The US ISM Services PMI triggered a slight drop in the dollar, but the dollar was still moving down for most of the day regardless of this report.
5M chart of the GBP/USD pair
On a 5-minute timeframe, the movement of the pound/dollar pair on Tuesday was pretty good. There were few trading signals, but there were also few levels. You should immediately deal with them. The 1.3465 level is the low of December 31st. The 1.3521 level is the high of December 30. The 1.3549 level is a strong level from the 30 minute TF. The price moved between them today. The first buy signal - a rebound from the level of 1.3465 - was formed at the beginning of the European session. The upward movement continued until the middle of the US session. On the way to the level of 1.3549, from which the final rebound took place, the price overcame the level of 1.3521. All this time, novice traders had to stay in long positions. In total, about 85 points were passed to the upside, which would be enough for any Take Profit. Also, the deal could be closed after a rebound from the level of 1.3549 in a profit of about 70 points. It was no longer necessary to open short positions from this level, since the signal was formed quite late.
How to trade on Wednesday:
At the 30-minute TF, the upward trend has been reversed, but if the 1.3549 level is overcome, then the upward trend can be resumed. However, we are more inclined to believe that a new round of the downward movement will begin. Therefore, everything now depends on the pair's behavior around the level of 1.3549. It is recommended to trade tomorrow at the levels of 1.3465, 1.3521, 1.3549, 1.3579, 1.3606 on a 5-minute timeframe. The price can rebound from these levels, or it can overcome them. As before, we set Take Profit at a distance of 40-50 points. At the 5M TF, you can use all the nearest levels as targets, but then you need to take profit, taking into account the strength of the movement. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven. No interesting events or reports expected in the UK tomorrow. Therefore, people will focus on the US ADP report on changes in the number of employees in the private sector, as well as on the Federal Reserve minutes. However, the minutes will be published very late, so it's not worth working out.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
