Trade Analysis of Thursday:
1H Chart of the GBP/USD Pair
The GBP/USD pair rebounded from the 1.3107 level on Thursday, which we identified as strong support, showing new growth and breaking the trend line, only to pull back immediately after. We believe the downward trend is over, but, as often happens, the pair may first correct before resuming its growth. Despite the British currency falling again overnight, it was in an upward trend for most of the previous day. Were there local reasons for this? No, there were not. If the pair had dropped by 100 pips yesterday, it would have been reasonable given the news and events throughout the day. Recall that the official conclusion of the US shutdown, which lasted for 43 days, was announced in the morning. Also, reports on UK GDP and industrial production were released and came in worse than expected. Therefore, the British pound had no grounds for growth yesterday, yet still increased. As we can see, movements remain illogical, and we remind traders that any growth now is justified based on global factors and reasons. Any decline is, by default, a correction and a technical movement.
5M Chart of the GBP/USD Pair
On the 5-minute timeframe, two excellent trading signals were formed on Thursday. During the European trading session, the price rebounded sharply from the 1.3096-1.3107 area, then rose throughout the day. Thus, novice traders could open long positions and, by evening, close them with a profit of 80-90 pips. The rebound from the area of 1.3203-1.3211 could also have been acted on, and this trade would have resulted in a profit, but this signal formed relatively late in the day.
How to Trade on Friday:
On the hourly timeframe, the GBP/USD pair has broken the trend line, so in the coming weeks, we expect the British currency to rise regardless of any local news or reports. As we have mentioned, there are no global grounds for a prolonged increase in the dollar, so we only expect movement to the upside in the medium term. If the correction/flat on the daily timeframe is completed, the pair may resume the global upward trend for 2025.
On Friday, novice traders can expect new trading signals to form in the areas of 1.3096-1.3107 and 1.3203-1.3211.
On the 5-minute timeframe, current trading levels to consider are 1.2913, 1.2980-1.2993, 1.3043, 1.3096-1.3107, 1.3203-1.3211, 1.3259, 1.3329-1.3331, 1.3413-1.3421, 1.3466-1.3475, 1.3529-1.3543, 1.3574-1.3590. On Friday, no significant events or reports are scheduled for the UK or the US, so volatility may once again be quite low today.
Key Principles of My Trading System:
- The strength of the signal is considered based on the time taken to form the signal (bounce or breach of a level). The less time taken, the stronger the signal.
- If two or more trades have been opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
- In a flat market, any pair can create numerous false signals or may not form them at all. In any case, it's best to stop trading at the first signs of a flat.
- Trading deals are opened during the period between the start of the European session and the middle of the American session, after which all deals 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 that is confirmed by a trend line or trend channel.
- If two levels are too close to each other (between 5 and 20 pips), they should be treated as an area of support or resistance.
- After a 20-pip move in the right direction, a Stop Loss should be set to breakeven.
What the Charts Show:
- Support and resistance price levels are targets for opening buy or sell positions. Take Profit levels can be placed around them.
- Red lines indicate trend channels or trend lines, reflecting the current trend and indicating the preferred trading direction.
- The MACD indicator (14,22,3) — histogram and signal line — is a supplementary indicator that can also be used as a source of signals.
Important announcements and reports (always available in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, it is recommended to trade with maximum caution or to exit the market to avoid sharp reversals against the preceding movement.
Beginners trading on the Forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is key to long-term success in trading.
