Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair tried again to start a new downward trend on Tuesday, as a day earlier it once again crossed the upward trend line, but again unsuccessfully. This time, the upward movement resumed even faster than on Monday. And despite the fact that the trend line is no longer relevant, the pound is still creeping up. We believe that such a move is absolutely illogical, since at this time there are no special fundamental reasons for the rise in the price of the British currency. Yes, the pound has been getting more expensive for three consecutive weeks and at first it was possible to find purely technical reasons for such growth. But three weeks without a correction is too much! And yet, the price has already crossed the trend line twice, which should provoke at least a small correction. Today, the upward movement resumed after the speech of Federal Reserve Chairman Jerome Powell began. The text of his speech was known in the morning, but at the same time, the markets could find something for themselves that reduced the demand for the dollar. At the same time, it is definitely impossible to call Powell's rhetoric dovish now, so the fall of the dollar was hardly provoked by this event.
5M chart of the GBP/USD pair
The movement of the pound/dollar pair on the 5-minute timeframe was quite difficult today, as there were at least three price reversals during the day. Frequent reversals are always bad, but let's look at the trading signals and figure out how to trade the pair today. Let's make a reservation right away that the level of 1.3561 is Tuesday's low, so it did not participate in today's trading. Thus, the first trading signal was formed after a rebound from the level of 1.3579, which, according to the results of today, has ceased to be relevant. However, after that, the price went up 31 points, which was not enough for Take Profit. The long position, therefore, should have been closed after the price was reversed below the level of 1.3603. The profit was 10 points. Consolidating below 1.3603 was also a sell signal, so novice traders could open short positions at this point. After the formation of this signal, the price went down 33 points, which again was not enough to trigger the Take Profit order. Therefore, this transaction had to be closed manually when the price went back above the level of 1.3579. The profit was also 10 points. At the signal of consolidation above the level of 1.3579, it was possible to open new long positions. The price subsequently went up 40 points, so this time Take Profit could work. But in any case, the deal should have been closed manually in the evening. In this case, the profit on it was about 35 points. Therefore, in any scenario, beginners could earn at least 50 points today according to our levels.
How to trade on Wednesday:
The upward trend is canceled on the 30 minute TF as the price has crossed the new upward trend line. Nevertheless, although the upward movement continues, we still expect it to end this week. The trendline itself is no longer relevant. It is recommended to trade at the levels of 1.3521-1.3531, 1.3561, 1.3603, 1.3638, 1.3688 at the 5-minute TF tomorrow. The price can bounce off these levels, or it can overcome 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. No major report will be published in the UK tomorrow, no major event scheduled. Thus, on Wednesday, newcomers should focus on the US CPI.
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.
