23.01.202223:35 Forex Analysis & Reviews: How to trade GBP/USD on January 24? Simple tips for beginners

Analysis of previous deals:

30M chart of the GBP/USD pair

The GBP/USD pair continued its downward movement on the final trading day of the previous week. The movement was weak, and volatility was lower than for the EUR/USD pair, which is extremely rare. As a result, the price overcame the previous local low - the level of 1.3571, which indicates the continued fall of the British pound. In principle, the pair's fall on Friday was justified. A report on retail sales was published in the UK in the early morning, which turned out to be significantly worse than forecasts. We cannot say that traders sold the pair all day based on this report alone, but there were no other important events during the day. After a fairly long rise, the pound continues its slow decline, and we believe that it will continue. In the new week, all attention will be focused on the Federal Reserve meeting, which can greatly affect the overall mood of the foreign exchange market.

5M chart of the GBP/USD pair

On the 5-minute timeframe, the movement of the pound/dollar pair was sideways for most of the day. That is, in fact, the price fell by 30 points only in the middle of the European session, and it was flat for the rest of the day. It turns out that the drop just happened after the release of retail sales. However, this makes it harder for us, since it is extremely difficult to trade with such a movement. Three trading signals were formed during the day - all around the level of 1.3572. It is very good that there was not one outright false one among them, which would have led to a loss, although formally all three turned out to be false, since the price could not work out even the nearest target of 1.3531. However, novice traders could and should have opened short positions after crossing the 1.3572 level. Subsequently, the high by which the price dropped was 15 points. That's how much the newcomers could earn on Friday. But what is surprising here if the total volatility of the day was 56 points?

How to trade on Monday:

The price left the descending channel very quickly on the 30-minute TF, but the downward trend persists. We warned about this, because the channel was very narrow and short-term. Thus, the downward movement can continue in the same unhurried style. The pound has few grounds for growth now, but there will be several very important events in the US next week that could lead to a rise in the dollar. On the 5-minute TF, it is recommended to trade by levels 1.3488, 1.3521-1.3531, 1.3572, 1.3598-1.3603, 1.3652-1.3660. Indices of business activity in the service and manufacturing sectors will be published in the UK tomorrow. If their values turn out to be much lower than forecasts, this may provoke new short positions on the British currency. US business activity indices are less likely to affect the course of trading, but they also do so.

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 American 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 (14,22,3) 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.