On Thursday, GBP/USD continued its bearish correction, although it was weak. There was nothing interesting about the macroeconomic and fundamental background. Therefore, there was nothing to react to. The pound keeps correcting after a very strong upward movement, but this correction doesn't really mean anything, since the pound can rise at any moment for no reason at all. This is the current reality in the market. There is simply no reason to form a new trend line right now, because the movement is absolutely illogical, and the pair can trade higher without it. I still expect a sharp fall from the pound, but we can't rely on it yet. The only hope is for Friday's US unemployment and Nonfarm data, as well as for the market's adequate reaction to them.
There were actually no trade signals on the 5-minute chart. The pair spent most of the day in the range of 1.2444-1.2471, and the overall volatility of the day was about 80 pips, which is quite small for the pound. As a result, beginners could work out a buy signal, which appeared during the European trading session, but it turned out to be false. There was also a sell signal during the US trading session. It also turned out to be false, but at least traders managed to place Stop Loss at Breakeven, which was used to close the position. Therefore, only one signal turned out to be unprofitable, which is quite logical since the pair was almost flat during the day.
On the 30-minute chart, GBP/USD took a small break after another strong growth. The 1.2440 level did not live up to expectations and the pair broke through it. So now the pair can trade higher. There is no point in drawing a new uptrend line because consolidating below it does not lead to a downward movement. The pound is overbought and continues to rise anyway. The pound doesn't have any reason to rise further, but it still does. And during the days when it does have a good reason to show growth, it doesn't. On the 5-minute chart, it is recommended to trade at the levels 1.2143, 1.2171-1.2179, 1.2245-1.2260, 1.2343-1.2360, 1.2396, 1.2444-1.2471, 1.2577-1.2616, 1.2659-1.2674. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. There is absolutely nothing planned for Friday in the UK, while the US will release reports on unemployment and Nonfarm, which are always very important. We should prepare for the market's reaction, whatever it may be.
1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
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 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, and 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 patterns (channels and trendlines).
Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.
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