GBP/USD trading plan for February 3, 2022. Trading tips for beginners

The pound/dollar pair extended the bull run on Wednesday after it had consolidated above the descending trendline. So, the downtrend has stopped and the uptrend may now extend. However, the Bank of England's interest rate decision may have a strong effect on the pound/dollar pair. It is unclear how the quote will move on Thursday. On the one hand, there is a 95% chance of a rate hike by the BoE, which is surely a bullish factor. On the other hand, the pound sterling has been bullish for three days. Therefore, it can be assumed that the rate hike has already been priced in by market participants. Generally speaking, there are more questions than answers to them. If the pair moved sideways or showed modest growth, we would expect the market to react to the regulator's decision. But taking into account the 3-day bull run, anything could happen.

In the M5 time frame, the price moved in a clear trend. A rebound from the 1.3521-1.3531 range produced a buy signal. The quote then rose by 50 pips and broke through 1.13572. This level is no longer valid, so it has been removed. Long positions were supposed to be closed after consolidation below this mark. The price had fixed above it several times and went lower afterward. So, beginners could incur losses there as the signals were false. In the second half of the day, traders became less active. They seemed to had done everything they could ahead of the Bank of England's meeting. So, they are now awaiting the bank's decision. We remind beginners that the pair may be extremely very volatile on Thursday and that its reactions could not be foreseen in advance.

In the 30M time frame, the downtrend ended. Technically, the pound may now extend the bull run. However, it will only be possible after the BoE meeting. The price behavior will remain unclear before that. The target levels in the 5M time frame are seen at 1.3488, 1.3521-1.3531, 1.3598-1.3603, and 1.3652-1.3660. The Bank of England will announce its decision on interest rates and Governor Andrew Bailey will speak on Thursday. Both events are of utmost importance. In the United States, the ISM non-manufacturing PMI will be released but it will not receive as much attention as the BoE meeting.

1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.

2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.

3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.

4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.

5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.

6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.

Support and resistance price levels can serve as targets when buying or selling. You can place Take Profit near them.

Red lines are channels or trend lines that display the current trend and show which direction is better to trade.

MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.

Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginner traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in long-term trading.