Analyzing Thursday's trades:
GBP/USD on 30M chart
GBP/USD was still trading in the horizontal channel on Thursday which is perfectly shown in the chart. The technical picture does not change ahead of the New Year. There are still no fundamental and macroeconomic events so traders have nothing to react to. I expect the pound to fall further but the situation will have to be analyzed next year. There will be plenty of reports next week, especially business activity indexes and data on the labor market and unemployment in the US. Most likely, the flat will end, but at the same time it may persist for a few more weeks. Anyway, beginners should wait for the price to leave the horizontal channel or trade on a bounce from its limits.
GBP/USD on M5 chart
On the 5-minute chart, you can clearly see that there were two signals yesterday. The price bounced from 1.2064 both times. In the first case, it was down 27 pips, in the second by 20 pips. Thus, in both cases, beginners had to put Stop Loss on short positions. Those were the orders on which both trades were closed. Therefore, there was no profit or loss on Thursday. Take note that this scenario is not the worst since there is a total flat on the market, which means a high probability of false signals that can lead to losses.
Trading tips on Friday:
On the 30-minute time chart, GBP maintains a downtrend, even though the trend line has lost its relevance. At the same time, take note that the pair has been in the horizontal channel for six days, so there is a high probability that the flat will still persist. On the 5-minute chart, it is recommended to trade at the levels 1.1793, 1.1863-1.1877, 1.1950-1.1957, 1.2008, 1.2064-1.2079, 1.2141, 1.2186-1.2205. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. There are no important events or reports in the UK or US. Thus, there will be nothing to react to and there's still a high probability of a flat.
Basic rules of the trading system:
1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
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 channels or trend lines that display the current trend and show in which direction it is better to trade now.
The MACD indicator (14, 22, and 3) 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 patterns (channels and trendlines).
Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.
