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Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair spent the third trading day of the week in an upward movement, but it was not possible to benefit from this in the 30-minute timeframe. Let's start with the fact that earlier the pound/dollar pair settled below the upward trend line (it is now marked with a dotted line). Therefore, we concluded that a downward trend had formed and so we advised novice traders to consider short positions on Wednesday. However, the price had already managed to overcome the previous local high when the MACD indicator reversed to the downside. That is, to put it simply, it climbed too far up. Moreover, by that time, beginners could have already formed a new upward trend line, according to which only buy signals should have been considered. Therefore, the technical picture for the pound/dollar pair has changed to the opposite during the day and novice traders needed to quickly navigate and change their trading strategy. Now there is an upward trend in the pair, which means that you can consider trading bullish. The 1.3820 level looms on the horizon, from which the price may rebound.
5M chart of the GBP/USD pair
The pair's movements on the 5 minute timeframe were fairly accurate throughout the day. At the very least, it was possible to earn money on them, in contrast to the 30-minute chart. Let's start with the fact that at the beginning of the European trading session, a buy signal had formed when the price surpassed 1.3730. Therefore, one should have opened long positions from the 1.3741 level and aim for the nearest level of 1.3779. At the same time, the UK published its fourth quarter GDP report, which we paid attention to earlier. This report turned out to be strong, which implied that the pound's quotes would rise. Thus, we received buy signals from the 1.3730 level and the GDP report. Novice traders could get around 38 points of profit on this trade. It surpassed the 1.3779 level, which made it possible for us to stay in long positions, however, the upward movement did not continue (by that time the price had already risen by 78 points from the day's low), therefore, one could already close long positions once the quotes ended below the 1.3779 level. You could also open short positions on this signal, given the fact that the upward movement did not continue. However, the sell trade was closed by Stop Loss at breakeven, as the bears could not put pressure on the pair, but the price went down around 20 points after the signal was generated. Afterwards, the price also overcame the 1.3779 level from the bottom up, however, given the two false signals from this level from earlier, it was no longer necessary to open new positions. At the end of the day, the pair also hit the 1.3810 level, and there was a rebound from it. Therefore, you can open a short position here by immediately placing Stop Loss above the 1.3810 level.
How to trade on Thursday:
On Thursday, we recommend trading according to a new upward trend that formed on the 30-minute timeframe. Manufacturing PMs from the UK and the US are due tomorrow. Not the strongest data, but it can have a definite impact on the pair's movement. Therefore, pay attention when they are released. The same goes for the report on claims for unemployment benefits in the United States. You need to wait for a new strong buy signal to form on the 30-minute timeframe. You can also open long positions once the price clearly surpasses 1.3820. Conversely, you can open short positions with a clear rebound from the 1.3820 level. On the 5-minute timeframe, we recommend paying attention to levels 1.3810, 1.3820 and 1.3846. Signals can also form around them. You can open short positions from the 1.3810 level. As before, we set Take Profit at a distance of 40-50 points on the 30-minute timeframe, while the target is the nearest level on the 5-minute timeframe. We recommend setting Stop Loss to breakeven when passing 20 points in the right direction. You can also open short positions when breaking the trend line on the lower timeframe.
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.
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