Analysis of previous deals:
30M chart of the GBP/USD pair
Last Friday, the GBP/USD pair slightly retraced from its local highs on the 30-minute timeframe, but in general this movement cannot be called any special. Do recall that earlier the pair fell quite unexpectedly by 250 points for several days, and over the next few days it quickly recovered almost everything it had lost. Considering that in the first four days of this working week there was not a single important event in either the UK or the US, it was quite surprising to observe such volatile movements of the pair, especially considering that the euro/dollar pair stood still. Thus, the pound has clearly reacted to something of its own lately. Perhaps it was news of the fourth wave of the pandemic in the UK, which at first developed rapidly and then began to recede. One way or another, it seems that it is difficult to trade the pound. Even a clear trend line cannot be formed now. We have deliberately plotted the trend line in the chart with a dotted line, since it is not suitable for trading. The two peaks formed too close to each other, as a result, when the price broke this line, most of the upward movement had already been passed.
5M chart of the GBP/USD pair
Last Friday, everything revolved around the same 1.3755 level on the 5-minute timeframe. All trading signals of the day were formed around it. It should be noted right away that the volatility of the pair was 60 points, which is quite a bit for the pound. The first trading signal was formed early in the morning - the price surpassed the level of 1.3755. However, this signal turned out to be false, since the price did not reach the level of 1.3677 (the level of 1.3718 was not yet there - this is Friday's low) and did not go down 40 points, which would have been enough to trigger Take Profit. As a result, a short position was closed at breakeven by Stop Loss. Further, the price initially settled above the level of 1.3755, which should be regarded as a buy signal, and then for a long time (actually, until the end of the working day) it moved along this level. Thus, the buy signal also turned out to be false and novice traders could not make money. Nevertheless, the newcomers did not receive losses on Friday either, except for a couple of points.
Trading tips for Monday:
At this time, the pound/dollar pair has begun a weak downward movement on the 30-minute timeframe, but it is rather difficult to say what any of the pair's movement is based on at this time. It is still not possible to form a normal trendline or channel to trade this timeframe. Therefore, we still recommend that you do not track signals from the MACD indicator until a trend movement of normal strength begins with a trend line or channel. The important levels on the 5 minute timeframe are 1.3677, 1.3718, 1.3755 and 1.3800. 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 or publications scheduled for Monday in the UK. Only one significant report on durable goods orders will be published in the US, which is unlikely to provoke a strong reaction from traders.
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