Analysis of Monday's Trades:
1H Chart of GBP/USD Pair
The GBP/USD pair moved similarly to the EUR/USD pair on Monday. In the first half of the day, the dollar again leaned towards growth as the situation in the Middle East did not improve, and over the weekend, Donald Trump promised to strike Iranian energy if the Strait of Hormuz was not unblocked within 48 hours. To this, Iran responded by stating its readiness to retaliate against the energy sectors of the US allies in the region. Thus, traders were preparing for a new escalation of the military conflict in the Middle East from the start of the week. However, Trump, in his characteristic style, shocked the markets on Monday by stating that "very good negotiations" had taken place with Iran, and he was postponing his decision on strikes against energy for five days, implying that peace may soon prevail in Iran.
However, just half an hour later, Iranian officials reported that no negotiations were taking place with Washington, but the market chose to believe Trump, interpreting his message as a willingness to end the conflict. It cannot be said that the pound rose significantly by the end of the day; the new upward trend remains very weak, corrective, and lacks corresponding fundamentals.
5M Chart of GBP/USD Pair
On the 5-minute timeframe on Monday, a large number of trading signals were formed, but most occurred after Trump's announcement, when the price began to fluctuate wildly in various directions. Thus, we will only consider those signals that were formed before Trump's speech. There were only two such signals. The pair bounced twice from the area of 1.3319-1.3331, which ultimately provoked a fall to the area of 1.3259-1.3267. Novice traders could have profited approximately 40 pips from the morning drop.
How to Trade on Tuesday:
On the hourly timeframe, the GBP/USD pair could finally begin forming an upward trend. There are no global factors driving medium-term dollar growth, so in 2026, we expect a resumption of the global upward trend from 2025, which could push the pair toward a low of 1.4000. In recent weeks, the market has been completely focused on the war in the Middle East, but this factor cannot sustain the dollar indefinitely. There are no other factors supporting the dollar.
On Tuesday, beginner traders may open short positions if the price consolidates below or bounces from the 1.3403-1.3407 area, targeting 1.3319-1.3331. If the price consolidates above the 1.3403-1.3407 area, long positions can be opened with targets at 1.3437-1.3446 and 1.3484-1.3489.
On the 5-minute timeframe, the following levels should currently be monitored: 1.3096-1.3107, 1.3203-1.3212, 1.3259-1.3267, 1.3319-1.3331, 1.3403-1.3407, 1.3437-1.3446, 1.3484-1.3489, 1.3529-1.3543, 1.3643-1.3652, 1.3695, 1.3741-1.3751. On Tuesday, business activity indices for the services and manufacturing sectors are scheduled for publication in both the UK and the US, but the market is likely to be focused on developments in the Middle East.
Key Principles of the Trading System:
- The strength of a signal is determined by the time it takes to form the signal (bounce or breakout). The less time taken, the stronger the signal.
- If two or more trades have been opened at a particular level based on false signals, all subsequent signals from that level should be ignored.
- In a flat market, any pair can form many false signals or none at all. In any case, at the first signs of a flat trend, it is best to stop trading.
- Trading deals are to be opened during the period between the start of the European session and the mid-American session, after which all trades should be closed manually.
- On the hourly timeframe, it is preferable to trade based on signals from the MACD indicator only when there is good volatility and a trend confirmed by a trend line or trend channel.
- If two levels are positioned too close together (5-20 pips apart), they should be considered a support or resistance area.
- Upon moving 20 pips in the correct direction, a Stop Loss should be set to breakeven.
What to Look for on the Charts:
Price levels of support and resistance are levels that serve as targets when opening buys or sells. Take Profit levels can be placed around them.
Red lines represent channels or trend lines that show the current trend and indicate the direction in which it is preferable to trade now.
The MACD indicator (14,22,3) – the histogram and the signal line – is a supporting indicator that can also be used as a source of signals.
Important speeches and reports (always included in the news calendar) can significantly affect the movement of the currency pair. Therefore, during their release, trading should be done with utmost caution, or traders should exit the market to avoid sharp price reversals against the previous movement.
Beginning traders in the forex market should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success.
