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Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair traded for most of the day without a definite, clear direction on the 30-minute timeframe on Wednesday. However, that all changed in the afternoon when the US inflation report for April was released. We have already said that this report turned out to be significantly worse than forecasts, which predicted a 3.6% increase in prices compared to last April. In reality, prices rose by 4.2% y/y. However, it seems that the markets did not immediately understand what to do with the dollar in connection with this information, and when they did, they made a mistake in their conclusions. Or they interpreted the report in their own way. We remind novice traders that rising inflation is a negative moment for a currency. Thus, today it would be much more logical to see the dollar falling and, accordingly, the growth of the pound/dollar pair. However, the pound has been growing for seven days until today, so it was trivial to continue its growth. In general, by the end of today, the dollar rose in price, and novice traders could be convinced that the markets do not always react "correctly" to a particular report. The upward trend line is maintained for the pound/dollar pair on the 30-minute timeframe, so it is recommended to consider only buy signals from the MACD indicator. Today, only one such signal was generated, but much below the zero level, so it should not have been processed.
5M chart of the GBP/USD pair
The GBP/USD pair traded almost identically to the EUR/USD pair on the 5-minute timeframe. In total, two signals were formed during the day, both near the level of 1.4081, but both should not be worked out. The first signal was formed exactly when the US inflation report was published, afterwards the "swing" began, the second was formed when the whole movement ended, at the end of the day. Not a single signal generated during the European trading session. The 1.4149 level was not on the chart today, which is the day's high, and can only take part in trading tomorrow. By the way, take note that the inflation report was not the only report of the day. A report on UK GDP was also published, which showed that the British economy lost 1.5% in the first quarter, but accelerated recovery in March. Industrial production data and several other relatively important reports were also released. All of them came out in the morning, at the beginning of the European session, but there was practically no reaction to them. One only has to compare the pair's movements after the inflation report was released and after the UK reports were published. Bank of England Governor Andrew Bailey's speech was also expected, which began an hour and a half later after the US inflation report. Therefore, it is now difficult to say why the pair continued to decline over the past few hours.
Trading tips for Thursday:
At this time, an upward trend is maintained on the 30-minute timeframe, supported by an uptrend line. However, the pair has also started to correct, so you need to wait for buy signals from the MACD. The indicator is below the zero level, so now you need to wait until it rises back to this level. The important levels on the 5 minute timeframe are 1.4008, 1.4081 and 1.4149. The price can bounce off them or surpass them. As before, we set Take Profit at a distance of 40-50 points. You can also use all the nearest levels as targets, but then you need to take the profit, taking into account the strength of the movement, so as not to close the deal too early. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven. Bailey is set to speak again in the UK on Thursday, and we also have several side reports in America. We advise you to pay attention to these events.
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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