Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair continued to move in a limited price range on the 30-minute timeframe on Wednesday. To better understand how the pound/dollar pair is moving now, we have formed a horizontal channel, which almost perfectly fits into the current technical picture. The channel width is 86 points and quotes have been in it for five days already. Today, in particular, they have reached the upper boundary of this channel and rebounded from it. Thus, one could even use this moment as a sell signal, however, in a flat, we still do not recommend opening positions for novice traders. For the same reason, we do not recommend considering signals from the MACD indicator. Unfortunately, today the macroeconomic background did not provide any help to traders either. UK reports on GDP and industrial production (the first check in the picture below) did not provoke any market reaction at all. And the report on US inflation provoked multidirectional movements, during which the US dollar also managed to fall in price. Although its growth would be much more logical.
5M chart of the GBP/USD pair
The picture is much more complicated on the 5-minute timeframe and requires detailed analysis. There were a lot of trading signals for the pound today, but a good half of them should have been eliminated. For example, the first buy signal was formed within 6 hours. It can hardly be called strong or accurate. We filter it out. This was followed by two rebounds from the level of 1.3638, which can be called accurate. The first approach to the downward movement was unsuccessful, and the price returned to the level of 1.3638. However, according to Stop Loss, the short position was not closed, since the price did not go down 20 points. But on the second run, the downward movement turned out to be stronger, and the price overcame the level of 1.3612 on the way and went down 43 points in total. Therefore, the least Take Profit, equal to 40 points, was triggered. The reverse buy signal - consolidation above the level of 1.3612 - should not have been worked out anymore, since at that moment already two signals around this level turned out to be false. Then the pair returned to the 1.3638 level and began to dance around it. At first, it even bounced off it, which could be interpreted as a sell signal. However, this signal turned out to be false and beginners could get a loss of 15 points. The next signal finished forming in the evening, so it was clearly not worth working out. As a result, we managed to earn about 25 points today.
How to trade on Thursday:
There is no clear trend at this time on the 30-minute timeframe. A horizontal channel has also been formed for the pound/dollar pair, so we still do not recommend considering signals from the MACD indicator. The important levels on the 5-minute timeframe are 1.3571, 1.3612, 1.3638, 1.3688 - 1.3692. We recommend trading on them on Wednesday. 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 Thursday, there won't be a single important and interesting report in the UK, and only minor ones in America. Therefore, no macroeconomic background tomorrow.
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.
The material has been provided by InstaForex Company - www.instaforex.com