Analysis of Wednesday's Trades
1H Chart of GBP/USD
The GBP/USD pair continued its upward movement on Wednesday, following the new trend. Recall that the price had settled below the previous ascending trendline just a week ago, yet a downtrend never formed. The fundamental and macroeconomic background didn't allow the market to sell the pair. Donald Trump's tariffs couldn't be repealed in court, and as of yesterday, the US president raised tariffs on steel and aluminum imports to 50%. Meanwhile, trade negotiations with China and the European Union are still stalling. These factors were enough for the US dollar to resume its decline. However, against the British pound, it seems the dollar can only fall—almost without any corrections, as is especially visible on the 4-hour and daily timeframes. Yesterday, the macroeconomic backdrop also supported the pound, as the two most important reports of the day (ADP and ISM) disappointed. The new trendline once again supports the bullish traders.
5M Chart of GBP/USD
On the 5-minute timeframe on Wednesday, several trading signals were generated, but not all of them were profitable. The first sell signal around the 1.3518 level turned out to be false. The next two buy signals near the same level were a bit better and duplicated each other. Later, during the US trading session, the pair rose to the 1.3580–1.3592 area, where taking profits on long positions was advisable. A rebound from the 1.3580 level could also have been traded, and that trade could have yielded several dozen pips of profit.
Trading Strategy for Thursday:
In the 1-hour timeframe, GBP/USD continues to be influenced primarily by Trump and still exhibits a very skeptical attitude toward his policies. Some signs of easing trade tensions are present, but the market remains largely unoptimistic, and there are more signs of new tensions emerging. Last week, the dollar slightly strengthened, but that turned out to be just a technical correction, and further strengthening would require positive news on the trade war front.
On Thursday, GBP/USD may continue its upward movement, but today's macroeconomic background will be extremely weak. Therefore, hopes rest only on Trump, and trading should be based on technical factors.
On the 5-minute timeframe, you can now trade using the following levels: 1.3043, 1.3102–1.3107, 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3421–1.3443, 1.3518, 1.3580–1.3592, 1.3652–1.3660, 1.3695. No significant events are scheduled for Thursday in the UK or the US, which suggests that volatility is unlikely to be high today. However, the results of the ECB meeting will be announced in the Eurozone, which could influence the euro, potentially affecting the pound as well.
Core Trading System Rules:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- Stop Loss: Set a Stop Loss to breakeven after the price moves 20 pips in the desired direction.
Key Chart Elements:
Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.
Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.
MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.
Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.
Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.
