Analysis of Monday's Trades:
1H Chart of the GBP/USD Pair
The GBP/USD pair continued to decline on Monday amid heightened tensions in the Middle East. As of now, a full-scale war could restart today, but we do not believe this factor will lead to a new prolonged trend in the US dollar, as seen in February and March. Nonetheless, it should be acknowledged that further growth for the EUR/USD pair will now be difficult. The upward trend on the hourly timeframe remains, as the pair left the sideways channel of 1.3476-1.3587 last week, but has since returned due to geopolitical factors. Therefore, we can expect a lively week ahead, with plenty of geopolitical news and significant macroeconomic reports. Remember, the first week of each month is when the US releases labor market and unemployment data. On May 15, Kevin Warsh will become the new Federal Reserve chair, and he is expected to adopt a "dovish" stance. However, if US inflation continues to rise, it will be extremely difficult for Warsh and Miran to implement Trump's agenda.
5M Chart of the GBP/USD Pair
On the 5-minute timeframe, only one sell signal was generated on Monday. During the European trading session, the price bounced off the 1.3587-1.3598 range, allowing beginner traders to open a straightforward short position. This position could be manually closed by evening for a profit of at least 40 pips.
How to Trade on Tuesday:
On the hourly timeframe, the GBP/USD pair continues to form an upward trend. There are still no global reasons for medium-term growth for the dollar, even with the potential renewal of conflict in the Middle East. Therefore, we expect the resumption of the upward trend from 2025 in 2026. Without a serious escalation in the Middle East, the dollar will not be able to demonstrate the growth it showed in February and March. Individual events may still provoke their strengthening, but overall, the geopolitical factor has taken a backseat.
On Tuesday, beginner traders can open short positions if the price consolidates below the 1.3476-1.3489 area, targeting 1.3380-1.3386. A price bounce from the area of 1.3476-1.3489 will allow for new long positions with a target of 1.3587-1.3598.
On the 5-minute timeframe, traders can currently operate based on the following levels: 1.3175-1.3180, 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3476-1.3489, 1.3587-1.3598, 1.3695, 1.3741-1.3751. Today, the UK calendar of events is completely empty, while the US will release two relatively important reports: ISM and JOLTs. While these indicators should not be overlooked, it is essential to understand that the market has shifted its focus back to geopolitics.
Main Rules of the Trading System:
- The strength of the signal is determined by the time it took to form the signal (bounce or breakout of the level). The less time it took, the stronger the signal.
- If two or more trades were opened near any level based on false signals, all subsequent signals from this level should be ignored.
- In a flat market, any pair can generate many false signals or none at all. Technical levels may be ignored.
- On the hourly timeframe, it is preferable to trade signals from the MACD indicator only in the presence of good volatility and a trend that is confirmed by a trend line or trend channel.
- If two levels are too close together (5-20 pips apart), treat them as a support or resistance zone.
- After a move of 15 pips in the right direction, a Stop Loss should be set to breakeven.
What is on the Charts:
Price levels (areas) of support and resistance – levels that are targets when opening purchases or sales, or sources of signals.
Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.
MACD indicator (14, 22, 3) – histogram and signal line – a supporting indicator that can also be used as a source of signals.
Important speeches and reports (contained in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be done as cautiously as possible, or one should 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 sound money management are key to long-term trading success.
