Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair tried to stay inside the descending channel on the 30-minute timeframe on Monday, the upper border of which had already been broken earlier. However, nothing came of this venture, since the dollar began to fall in the US trading session (= growth of the pound/dollar pair), which pushed the quotes to settle above the channel. Thus, the downward trend has been canceled, but at the same time it cannot be said that an upward trend has been formed. We have already said several times that the pair continues to trade in a very narrow sideways range, mainly between the levels of 1.4100 and 1.4220. And it has been there for more than three weeks. Last week there were hopes that the pair would start a downward trend, but, as we can see, they were not destined to come true. At this time, we recommend that novice traders assume that the pound/dollar pair is in a flat. Accordingly, it is better to trade on a lower timeframe. No major report published in the UK or the US on Monday, nor was there a single major event.
5M chart of the GBP/USD pair
On the 5-minute timeframe, the picture of the pair's movement, as usual, is much more interesting. Signals scattered and most of them could be processed. To begin with, at the very beginning of the European trading session, a sell signal was formed in the form of a breakthrough of the 1.4143 level. The price perfectly reached the target level of 1.4111, bounced off it, which served as a signal to open long positions, and made it possible to earn about 20 points. One could also earn 20 points on a long position, since the pair's quotes quickly returned to the level of 1.4143. This was followed by two false signals. However, it was clearly not worth duplicating them, so there was an 11-point worth of loss on the first trade. But later on the price surpassed the 1.4143 level, which served as another signal to open long positions. The first target (1.4165), was worked out fairly quickly. The price did not rebound from this level, which means that long positions could be held with the next target - the level of 1.4191. As a result, the pair fell short of reaching it by literally 2 points, but in total since the moment when the deal was entered, the quotes went up 40 points, which was enough for the Take Profit to work on the deal. Thus, in total novice traders could earn about 70 points on Monday.
Trading tips for Tuesday:
At this time, on the 30-minute timeframe, the pound/dollar pair returned to the horizontal channel of 1.4100-1.4220. Therefore, we recommend not tracking signals from the MACD indicator until the trend movement is restored. The important levels on the 5 minute timeframe are 1.4111, 1.4143, 1.4165, 1.4191 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 events or publications scheduled for Tuesday in the UK and US. So now novice traders will not have to pay attention to the macroeconomic or fundamental background.
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