Analysis of Friday's deals:
30M chart of the GBP/USD pair.
The GBP/USD pair continued its upward movement on Friday after leaving the side channel. However, if in the last few days the movement of the pair was trending and even strong, then on Friday it was the opposite. In principle, there were no compelling fundamental or macroeconomic reasons for the strong growth of the British currency this week. Thus, we believe that they are purely technical. But today, the pound traders also took a day off in honor of Christmas. Thus, the price has been moving exclusively sideways all day, but at the same time maintaining an upward trend. The ascending trend line currently supports traders to increase and it is impractical to consider short positions before fixing below it. There was not a single important macroeconomic report or fundamental event on Friday. The volatility was 30 points.
5M chart of the GBP/USD pair.
On the 5-minute timeframe, the movement of the pound/dollar pair on Friday was even more eloquent. The price moved exclusively sideways in a very narrow side channel. Volatility dropped due to Friday's semi-holiday status. But it doesn't matter to us why volatility has fallen. It is important that no trading signal was formed today, which means that novice traders should not have entered the market. The price did not even approach any of the important levels today. Therefore, there is nothing to analyze.
How to trade on Monday:
At this time, an upward trend is maintained on the 30-minute timeframe. The pound may continue to grow against the dollar at the end of the year and next week. On the 5-minute timeframe, the important levels are 1.3342, 1.3366, 1.3435, 1.3470. We recommend trading them on Monday. From them, the price can bounce or overcome. As before, we set Take Profit at a distance of 40-50 points. On the 5TH TF, you can use all the nearest levels as targets, but then you need to fix the profit, taking into account the strength of the movement. When passing 20 points in the right direction, we recommend setting the Stop Loss to breakeven. On December 27, not a single interesting report will be published in the UK and America. Also, not a single important event is planned. Therefore, volatility may remain low.
Basic rules of the trading system:
1) The strength of the signal is calculated by the time it took to generate the signal (rebound or overcome the level). The less time it took, the stronger the signal.
2) If two or more trades were opened near a certain level on false signals (which did not trigger Take Profit or work out the nearest target level), then all subsequent signals from this level should be ignored.
3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.
4) Trade deals are opened in the period between the beginning of the European session and the middle of the American session when all transactions must be closed manually.
5) On a 30-minute TF, signals from the MACD indicator can be traded only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as a support or resistance area.
What's on the chart:
Price support and resistance levels - target levels when opening purchases or sales. Take Profit levels can be placed near them.
Red lines - channels or trend lines that display the current trend and show in which direction it is preferable to trade now.
MACD indicator - a histogram and a signal line, the intersection of which are signals to enter the market. It is recommended to use it in combination with trend constructions (channels, trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market to avoid a sharp price reversal against the previous movement.
Beginners in the Forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management is the key to success in trading over a long period.