How to trade GBP/USD on May 5. Simple trading tips and analysis for beginners

The GBP/USD pair showed nothing but the most ordinary, low-volatility flat on Thursday. On the one hand, this is quite logical, since there was no macroeconomic background or any fundamental event for the both currencies on Thursday. On the other hand, the results of the Federal Reserve meeting were published on Wednesday night, so it would be reasonable to assume that the market would also be trading quite actively. However, in the end, there was nothing interesting. The pound once again failed to enter a correction, stayed near its local highs, and also failed to start falling after overcoming the fourth consecutive ascending trend line. Therefore, the nature of the pair's movement has not changed at all. We're still seeing illogical movements, which is an unreasonable market reaction to practically any event or report. Important US data will be published on Friday, but there's no guarantee that the market will respond logically.

The trading signals on the 5-minute chart were not the best. The pair moved sideways all day, staying close to the 1.2577-1.2597 area. All trading signals were formed around this area. The pair formed sell signals three times and could not even move 20 points in the right direction. Therefore, only one position should have been opened, and it remained relevant until the evening, as no buy signals were formed by that time to close the short position. The price also failed to reach the target level. In the end, the best case scenario for that one position was to get no profit. In the worst case, there could be a small loss. Considering the total flat, such an outcome is not the worst of possible options.

On the 30-minute chart, GBP/USD continues to trade higher in the medium term or, at least, it doesn't fall, which is clearly visible on the 4-hour chart as well as on higher ones. Most of the movements are illogical, as is the market reaction to fundamental and macroeconomic events. Overcoming the trend line gave absolutely nothing to the US currency. On the 5-minute chart, you can trade on the levels 1.2245-1.2260, 1.2343-1.2360, 1.2396, 1.2466-1.2477, 1.2507-1.2520, 1.2577-1.2597-1.2616, 1.2659-1.2674. When the price passes 20 points in the right direction after the trade is opened, you can set a stop loss at breakeven. On Friday, only the construction PMI is scheduled in the UK. In the US, we have the NonFarm Payrolls and unemployment reports. These are important reports that should provoke a reaction, but they could be unreasonable again.

1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.

2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.

3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.

4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.

5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.

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 channels or trend lines that display the current trend and show in which direction it is better to trade now.

The MACD indicator (14, 22, and 3) 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 patterns (channels and trendlines).

Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.