Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair fell on the 30-minute timeframe on Wednesday, November 10. Moreover, the downward movement began early in the morning, when 6 hours remained before the publication of US inflation. However, as in the case of the euro currency, traders began to buy the US currency in advance, anticipating that a surprise awaited them in the afternoon. After it became known about the acceleration of inflation to 6.2%, the dollar rose by 90 points, and in the first half of the day it added 50. Thus, the overall volatility of the day was about 140 points, which is a lot even for the pound. But, on the other hand, this is only good for us, so such movements gave hope for many strong and profitable trading signals. On the 30-minute timeframe today, the price did not reach the trend line, just a few points. And if there was a rebound, then beginners would receive the strongest sell signal. The downward trend continues at this time, and the pair fell to its annual lows around 1.3424. And all because of one report...
5M chart of the GBP/USD pair
On the 5-minute timeframe, not so many trading signals were generated today as might have been expected. On closer inspection, the movements of the pair themselves can hardly be called successful or good. Signals were formed today, but only about two levels and each strong signal was preceded by one or more false signals. This alignment is very unfortunate for traders, but let's see how you should trade today. The first buy signal was generated when the price bounced off the 1.3517 level. The pair went up after that by only 16 points and settled below the level of 1.3517. Thus, a new sell signal was formed, which also turned out to be false, since the price went down only 23 points after it. The most interesting thing is that the third signal also turned out to be false, but it, like the fourth signal near the level of 1.3517, should not have been worked out. Thus, according to the first two signals, a loss of 13 points was obtained (on the second trade, Stop Loss was triggered at breakeven). As a result, traders got two more signals near the level of 1.3470. The first, as expected, turned out to be false - the price bounced off the level of 1.3470 - long positions - a loss of 20 points. The last sell signal turned out to be profitable, as the price dropped to the next level of 1.3424, allowing 40-50 points to be earned. Therefore, the day ended with minimal gains.
How to trade on Thursday:
At this time, the downward trend continues on the 30-minute timeframe. Now we need to understand whether the pair will be able to overcome the level of 1.3424, from which it rebounded last time. If yes, then the downward movement will continue, if not, then a new round of upward correction will begin. The important levels on the 5-minute timeframe are 1.3415-1.3420, 1.3470, 1.3517. We recommend trading on them on Thursday. The price can bounce off them or 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. On November 11, novice traders should pay attention to the UK third quarter GDP report. There will be an even more or less interesting report on industrial production, but, most likely, the markets will only work out the first indicator.
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.