Deal Analysis for Thursday:
1H Chart for GBP/USD
The GBP/USD pair continued its upward movement on Thursday amid the Federal Reserve meeting. In previous articles, we mentioned that the market could react to such an important event for up to 24 hours. This time, there were no drastic fluctuations, but overall, the market reaction to the US central bank's meeting was not extraordinarily tumultuous. Rather, the GBP/USD pair resumed its upward trend, which has been forming for three weeks. As we warned, the British pound is expected to rise after a long five-month correction on the daily timeframe. Therefore, regardless of the Fed meeting, we only anticipate growth. There will be no significant events this week, except for a couple of reports from the UK this morning. However, next week, important macroeconomic data will be published in the US, and the Bank of England will hold a meeting where the key interest rate may also be lowered.
5M Chart for GBP/USD
On the 5-minute timeframe, the first trading signals were formed during the US trading session on Thursday. The pair first moved above the area of 1.3413-1.3421 from below and then from above to below. The first signal proved false, but long positions should have been opened earlier around 1.3319-1.3331 on Wednesday evening. If they were opened at all... However, the sell signal could have been exploited.
How to Trade on Friday:
On the hourly timeframe, the GBP/USD pair continues to establish a local upward trend. As we mentioned, there are no global factors driving medium-term dollar growth, so we expect movement only to the upside. Overall, we also anticipate the resumption of the global upward trend of 2025, which could lead the pair to the 1.4000 mark within the next couple of months.
On Friday, beginner traders may remain in short positions based on yesterday's sell signal. The target is 1.3331. The British pound is unlikely to fall that low, as the market trend remains upward. A price consolidation above the 1.3413-1.3421 area will allow opening long positions with a target at 1.3466.
On the 5-minute timeframe, trading can currently be based on the following levels: 1.2913, 1.2980-1.2993, 1.3043, 1.3096-1.3107, 1.3203-1.3212, 1.3259-1.3267, 1.3319-1.3331, 1.3413-1.3421, 1.3466-1.3475, 1.3529-1.3543, 1.3574-1.3590. On Friday, two interesting reports are scheduled in the UK: the monthly GDP and industrial production. We believe the second report may provoke a minor market reaction, but overall, both reports have extremely low odds of significantly influencing the GBP/USD pair.
Key Rules of the Trading System:
- The strength of a signal is assessed by the time it takes to form the signal (bounce or breakout). The less time it takes, the stronger the signal.
- If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
- In a flat, any pair can create numerous false signals or none at all. In any case, it's better to stop trading at the first signs of a flat.
- Trades are opened during the period between the start of the European session and the middle of the American session, after which all trades must be closed manually.
- On the hourly timeframe, when trading based on signals from the MACD indicator, it is preferable to trade only when good volatility is present, and a trend is confirmed by a trend line or channel.
- If two levels are positioned too closely to each other (5 to 20 points), they should be viewed as a support or resistance area.
- After moving 20 pips in the right direction, set the Stop Loss to breakeven.
Chart Explanation:
- Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
- Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
- MACD Indicator (14, 22, 3): A histogram and signal line, a supplementary indicator that can also be used as a source of signals.
Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.
Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.
