Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair rose on the 30-minute timeframe on Tuesday, but it sharply turned down and began to fall in the European trading session. In principle, the fall itself does not raise any questions, since the pair cannot constantly move in one direction. Another correction, after updating local highs, happened yesterday. Novice traders could only work it out competently. However, we remind you that the pound continues to move in a very difficult and often illogical manner. For example, yesterday the upward trend line was relevant, but today it has already been canceled. At the same time, there is no sentiment that the upward trend has ended and now a new downward trend awaits us. Nevertheless, a signal to break the trend line was formed and novice traders could work it out. It was possible to earn 20-30 points of profit depending on where exactly the short positions were opened. But at the same time, the transaction could have been closed at a Stop Loss level at breakeven, so we will not take it into account when calculating the overall result of the previous day. The MACD indicator did not receive a buy signal, and then to sell, which could be worked out.
5M chart of the GBP/USD pair
It was difficult to trade the GBP/USD pair on the 5-minute timeframe yesterday. It reached the existing levels in a very poor manner and had formed inaccurate signals, so I had to really try in order not to get big losses on Tuesday. The first buy signal was generated in the morning. The price bounced off the 1.4219 level twice, which is very inaccurate and unconvincing. This signal should have been filtered out, because the next level of 1.4232 lay a little higher, from which the price could bounce and did it in the end. Moreover, this signal to sell (rebound) was extremely inaccurate and should not have been worked out either, since the level of 1.4219 was below. It was necessary to wait for the quote to clearly overcome this level in order to be sure of the sell signal's strength. The quote surpassed the 1.4219 level, so beginners could open short positions here. The 1.4191 level was not on the chart yesterday, it just appeared today. Thus, after forming a sell signal, the pair went down by about 50 points and reached the level of 1.4165. Novice traders could take profits around the 1.4165 level. In any case, they would have made a profit of at least 40 points. However, it was not without a "fly in the ointment." First, the price went beyond the level of 1.4165 at the beginning of the US trading session, but there should not have been any new short positions here, since the previous short had just been closed. That is, if there was a desire to work out this signal, then you should not have closed the previous deal. A little later, the quotes returned above this level of 1.4165. Here you should have traded upward, but this signal turned out to be false. According to it, traders could get at least a profit worth around 10 points, since the upward movement did not continue, and the transaction had to be manually closed when it was approaching the evening.
Trading tips for Wednesday:
The upward trend for the pound/dollar pair has been canceled again on the 30-minute timeframe at this time, since the price overcame the upward trend line. So now we advise you to monitor sell signals from the MACD indicator, although there is still a possibility of the pair moving in a flat. The important levels on the 5 minute timeframe are 1.4091, 1.4135, 1.4165, 1.4191, 1.4210 and 1.4219. The price can bounce off them or surpass them. As before, we set Take Profit at a distance of 40-50 points. At the 5M TF, you can use all the nearest levels as targets, but then you need to take profit, taking into account the strength of the movement. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven. There are no major publications or events scheduled for Wednesday in the UK. And the macroeconomic calendar for the US is also empty.
On the chart:
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 the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator 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 lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company - www.instaforex.com