Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair fell by 80 points on the 30-minute timeframe, but at the same time it still remained within the 1.4100-1.4220 horizontal channel. And so, the flat continues, therefore, on the current timeframe, we advise you to ignore all the signals from the MACD indicator. Yesterday, there was no interesting report in the UK or America. Therefore, novice traders did not even have anything to turn their attention to. On the one hand, this is good, since one should have traded with only technical analysis, and not its combination with macroeconomics. On the other hand, the pair is still trading flat. And trading in a flat, in principle, is not the most pleasant experience. The pound continues to be near its 3-year highs, so we expect the upside movement to resume. But it's hard to say when this will happen.
5M chart of the GBP/USD pair
The picture of the pair's movement, as usual, is much more interesting on the 5-minute timeframe. During the day, there were movements that deserve attention, however, unfortunately, trading was very sluggish in the European session, which resulted in forming several false signals. Losses on them could have been avoided, but further profitable signals have already been filtered out. Let's deal with everything in turn. The first buy signal was in the form of a breakthrough of the 1.4165 level. In principle, we do not recommend entering the market when the candlestick at which the signal is formed is too strong. However, in the current situation, it is absolutely unimportant where novice traders enter a long position. An hour after the first signal was formed, a second similar one was also formed. The price did not reach the level of 1.4191 and could not go up 40 points either. Thus, this trade closed in the red by about 13 points when the pair settled below the level of 1.4165. The next one is a very difficult moment. At the time of the formation of the sell signal, which turned out to be strong and profitable, three signals had already been formed from the level of 1.4165, each of which was false. However, only one deal was opened for them. Therefore, in theory, short positions should not have been opened here, however, since it was only the second deal of the day, it was possible to take a risk. In any case, this moment was at the discretion of traders. If a short position was opened, then it brought a profit of 40-45 points.
Trading tips for Thursday:
At this time, on the 30-minute timeframe, the pound/dollar pair continues to trade in the 1.4100-1.4220 horizontal channel. Therefore, we still recommend not tracking signals from the MACD indicator until the trend movement has recovered. The important levels on the 5 minute timeframe are 1.4081, 1.4091, 1.4111, 1.4165 and 1.4191. We recommend trading with them. The price can rebound 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 in America, the release of the inflation report is scheduled, which could provoke a strong movement in the afternoon. Therefore, you need to be ready for this report.
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.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
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 announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
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