20.01.202223:24 Forex Analysis & Reviews: How to trade GBP/USD on January 21? Simple tips for beginners

Analysis of previous deals:

30M chart of the GBP/USD pair

The GBP/USD pair continued to adjust against the three-day downward movement. We said earlier that the descending channel that the pair left this week was too narrow and too short-term to be considered strong. Even taking into account the two-day upward movement, the downward trend may persist and resume. The movements during the day were multidirectional. By and large, a flat was observed during the day. There is absolutely nothing to distinguish from today's macroeconomic statistics in the UK, and the report on applications for unemployment benefits in America, which turned out to be significantly worse than forecasts, had a rather unexpected impact on the pair's movement. Thus, the dollar was under pressure during the US trading session. At the same time, this report did not affect the pound/dollar exchange rate too much. Volatility was low today anyway.

5M chart of the GBP/USD pair

The movement of the pound/dollar pair was nearly perfect on the 5-minute timeframe, despite the fact that it can be called flat, and the volatility was only 60 points. Nevertheless, at first the pair worked just perfectly and bounced from the 1.3598-1.3603 area, which we wanted to delete yesterday, but decided to leave it, and then from the 1.3652-1.3660 area, which did not cause any questions at all. Thus, novice traders could open two deals today. First to buy, and then to sell. In the first case, the price went up just 60 points, so 40-50 points of profit could be obtained. In the second case, there was also a profit, but the transaction should have been closed manually later in the evening. It was possible to earn 20 points on it. There were no new levels on the chart at the end of the day, since the low and high of the day practically coincide with the existing levels.

How to trade on Friday:

The downward trend was reversed very quickly on the 30-minute TF. Therefore, it is now formally possible to consider long positions, but we still expect that the pair's decline may resume. The descending channel was too unstable, it was quite easy to get out of it, since any one round of correction was needed. Thus, if you buy the pair using buy signals, then only with a half lot. On the 5-minute TF tomorrow, it is recommended to trade by levels 1.3572, 1.3598-1.3603, 1.3652-1.3660, 1.3688-1.3695. Tomorrow, a rather important report on retail sales for December will be published in the UK. The main thing in it is how much the actual value will differ from the forecast. If the difference is very large, then the market reaction to this report is possible. If not, then most likely it will not be. No more important events are planned for the last trading day of the week.

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.