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Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair on the 30-minute timeframe also continued to be impressed by the results of the recent Federal Reserve meeting. But, if the euro/dollar pair was moving strictly downward with minimal pullbacks almost all day, then the pound/dollar pair jumped in different directions, which is clearly seen on the lower timeframe. Nevertheless, it dropped 65 points and broke two levels during the day. Thus, the downward trend continues for the pair, and it has intensified over the past day. However, this increase is clearly based on such an important event as the Fed meeting, which happens once every month and a half. Thus, one should hardly expect that the pair will now trade in a similar manner every day.
5M chart of the GBP/USD pair
As mentioned above, a huge number of signals were formed on the 5-minute timeframe, most of which, unfortunately, are false. Nevertheless, let's look at how we should have acted during the day. We will immediately make a reservation that it was not advisable to consider long positions, since the results of the Fed meeting were clearly in favor of the US currency. Nevertheless, even if we filter out all buy signals, their total number is still big. The first signal was quite clear - a rebound from the level of 1.4006. This is where novice traders had to open short positions. Then the level of 1.3975 was reached and the pair surpassed it, but then the price quickly returned to the area above it, so short positions had to be manually closed. The profit was about 10 points. Next, one should wait for a new sell signal, which was formed when the price settled below the level of 1.3975. This signal did not bring profit to traders, since the price went down by around 30 points, which was enough to set the Stop Loss level to zero, but after that the price went up almost to the level of opening a position, so the deal was closed at breakeven. This was followed by another sell signal when the price settled below the level of 1.3947. Here, novice traders were lucky, as the price went down exactly 20 points, after which it turned up again and settled above the level of 1.3947. Thus, this trade was closed at breakeven as well. All subsequent signals near the level of 1.3747 should not have been considered any more, since at that moment two false signals had already been formed near this level. The last sell signal was formed after the price surpassed the level of 1.3923, but it should not have been worked out any more, as it was formed in the evening, when the trading day was coming to an end. Thus, in general, beginners could earn 10 points on all trades today.
Trading tips for Friday:
The pound/dollar pair continues its downward movement on the 30-minute timeframe, however, a clear trend is still not visible. The downward movement was triggered by an important fundamental event, therefore, it can stop at any time. 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 1.3865, 1.3885, 1.3923 and 1.3975. We recommend trading with them. The price can rebound off them or surpass 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. The UK retail sales report for May is scheduled for Friday and is the only report of the day. Thus, from the very morning the pair may fall under the influence of macroeconomics.
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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