Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair was correcting on the 30-minute timeframe for the entire day. The new support level of 1.3800 restrained the pair from falling below this area. Thus, the quotes began to recover after falling by more than 300 points at the end of last week. At the same time, the downward trend still retains its relevance, but there is still no trend line, no channel, no opportunity to form the first or the second. Thus, given that the growth of the dollar was somewhat random (meaning such a strong growth), in the coming days, the British pound (and the euro too) may regain most of last week's losses. There were no important macroeconomic and fundamental events on Monday. And so the growth of the pound/dollar pair was purely technical. This means that traders at this stage are satiated with selling the pair.
5M chart of the GBP/USD pair
Many levels have recently changed on the 5-minute timeframe since the pair collapsed by more than 300 points. Novice traders should pay attention to new levels. The pair was strictly moving upward for most of the day, so it was relatively easy to trade. Most of the trading signals were clear and accurate. Thus, we managed to reach some of them and make a profit. The first two buy signals were formed in the morning, when the price initially crossed the 1.3800 level and then bounced off it. This is where novice traders had to open long positions. This was followed by the ability to reach and surpass the level of 1.3838, which we decided to remove from the charts, and a little later - go beyond the new level of 1.3854. The upward movement was maintained all this time, and there were no signals to close long positions. In the end, the quotes reached the level of 1.3923 and even managed to surpass it. Here it was already possible to take profits on long positions, especially since there was still no sell signal during the day. Thus, in fact, five buy signals led to the opening of just one long position, which allowed novice traders to earn from 40 points (minimum Take Profit) to 110 points.
Trading tips for Tuesday:
At this time, on the 30-minute timeframe, the pound/dollar pair began an upward correction no less strong than the previous downward movement. Last week's downward movement was triggered by an important fundamental event and is therefore not stable. An upward correction can fully cover the loss of the British currency. Therefore, we still recommend not tracking signals from the MACD indicator until a trend movement of normal strength and with a trend line or channel begins. The important levels on the 5 minute timeframe are 1.3854, 1.3923, 1.3975 and 1.4006. We recommend trading with them. 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. There are no major events scheduled in the UK on Tuesday, and Federal Reserve Chairman Jerome Powell will speak late in the evening in the US. However, by that time, novice traders should have already left the market.
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.
The material has been provided by InstaForex Company - www.instaforex.com