Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair continued its downward movement on the 30-minute timeframe, November 24. Simple and easy. The markets did not even wait for the US data, but almost immediately continued selling the pound. The downtrend channel was slightly rebuilt during the day, but the downward trend is now clear. Today the pound has renewed its annual lows again. We draw the attention of novice traders to the fact that the markets ignored macroeconomic statistics that could help the pound to correct against the dollar at least a little. The third quarter GDP report in the US was weaker than forecasts, as was the report on orders for durable goods. Nevertheless, the pound's decline only accelerated in the afternoon. Based on this, we conclude that the main thing now is the mood of the markets. "Fundamentals" and "macroeconomics" are now not too important for the pound/dollar rate. This week, in any case, there are few important events and reports.
5M chart of the GBP/USD pair
The movement of the pound/dollar pair looks good on the 5-minute timeframe, although not in the best way. The main thing is that intraday trend movement was observed during the day. Therefore, one could count on the formation of strong signals and profit. There were few signals, only two, and not the best ones. The first one - to buy - was formed near the level of 1.3352 and turned out to be weak and false. The price could not go up after it formed 20 points, so novice traders could not set Stop Loss to breakeven. As a result, the trade closed at a 13 points loss when the price settled below 1.3352. However, the second short position already turned out to be more successful, since after the formation of the corresponding signal, the price went down by about 23 points, which made it possible to cover the loss on the first deal and make some money. Overall not the best day, but no losses were incurred.
How to trade on Thursday:
At this time, on the 30-minute timeframe, the upward trend has been replaced by a downward one. Traders passed the 1.3352 level without any problems, but now they have a new obstacle on their way - the 1.3304 level. Thus, in order for the British currency to fall further, it is now required to overcome this level. The important levels on the 5-minute timeframe are 1.3304, 1.3352, 1.3396. We recommend trading on them on Thursday. The price can bounce off them or overcome them. There are no important levels below, as the price has not been at these price levels for over a year. 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. Bank of England Governor Andrew Bailey is scheduled to speak in the UK on November 25, but we do not believe that important information will be announced during it. Accordingly, the markets are unlikely to respond by actively opening deals to this event.
Basic rules of the trading system:
1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.
2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.
3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.
4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the US one, when all deals must be closed manually.
5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.
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.