Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair, as well as the EUR/USD pair, fell quite significantly on the 30-minute timeframe on Thursday, due to macroeconomic reports from overseas. In addition to the fact that the US reports were strong, the markets finally reacted quite well to it, which is also not very often. The technical picture has also become clearer, so to speak. At least, at the moment, a descending channel has been formed, within which we understand that we should look for sell signals from the MACD indicator. Back to the US reports, the ADP report on the change in the number of employees in the private sector was the main driver of the previous day. The markets expected to see an increase of 650,000, and saw almost a million. Thus, the strengthening of the US currency yesterday is absolutely justified. I was also pleased with the second report, which we paid attention to yesterday. The ISM index of business activity in the service sector was predicted to rise to 63 points, but in reality it rose to 64. But there was no reaction to Bank of England Governor Andrew Bailey's speech in the evening.
5M chart of the GBP/USD pair
The picture of the pair's movement on the 5-minute timeframe, as usual, is much more complicated. We did not recommend trading on the 30-minute timeframe in the last review, but about a dozen signals were formed on the 5-minute timeframe. Not all of them should have been worked out. Let's start to figure it out. The first buy signal was formed through a breakthrough of the 1.4165 level and it should not have been worked out, since an index of business activity in the service sector was published in the UK at exactly the same time. The next buy signal - a breakthrough of 1.4191 - turned out to be blatantly false. The price almost immediately after it was formed had then settled below this level, which brought a loss of 13 points. At the same moment or at the next sell signal in the form of a price rebound from 1.4191 from below, a short position should have been opened. Subsequently, the price dropped to the level of 1.4111 (it stopped near this level for the first time), so novice traders could profit from 40 points (according to Take Profit) to 70 points (closing on a rebound from the level of 1.4111). All signals during this downward movement were also to sell, so, naturally, one should not open new short positions when one such was already opened. The signal to buy in the form of a rebound from 1.4111 should not have been worked out, since exactly at that moment the ISM business activity report was released in America. The next rebound from the level of 1.4111 from below could be worked out, but the price fell by only 12 points and made two rebounds from the level of 1.4091. It was not worth working out both of the last signals, since the first was formed exactly at the beginning of Bailey's speech, and the second had already appeared late in the evening. Therefore, beginners could earn 40 to 70 points yesterday.
Trading tips for Friday:
At this time, on the 30-minute timeframe, a downward trend has formed in the form of a downward channel. So now it is recommended to consider short positions on this timeframe based on signals from the MACD indicator. To do this, you need to wait for it to discharge to zero level, which is not yet available. The important levels on the 5 minute timeframe are 1.4081, 1.4091, 1.4111, 1.4143 and 1.4165. The price can bounce off them or go beyond 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. Today, we only have the index of business activity in the construction sector in the UK, meanwhile, the US will release important reports on Nonfarm Payrolls and unemployment, as well as a speech by Federal Reserve Chairman Jerome Powell.
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.
