How to trade GBP/USD on May 12. Simple trading tips and analysis for beginners

The GBP/USD pair traded significantly lower on Thursday, which could be the start of a long-awaited downtrend. So far, the pound has only been falling for the second consecutive day, and it had quite valid reasons to depreciate. Traders were not particularly surprised by the results of the Bank of England meeting, but the speech by BoE Governor Andrew Bailey had a clear dovish tone. Bailey, in particular, stated that the rate could further increase on a case-by-case basis, and inflation will start to decline in April. These two statements give us the understanding that a pause in monetary tightening may be taken as early as June, and the BoE rate could be raised 1-2 more times. We can assume that such a rate hike has long been factored into the market, so the pound also has no more reasons to grow.

So far, it is impossible to form a trend line or channel that would support the bears. Now the main thing is "not to scare" the pound. It has been rising for a long time without solid reasons, so the bulls have not yet made a final decision to leave the market and can regain the initiative at any moment. Especially if there are informational reasons to do so.

Trading signals on the 5-minute chart made it possible for traders to earn a bit, but it wasn't clear. The pair stood still throughout the European session, in the channel between levels 1.2577-1.2616. Recall that this channel greatly complicated the life of traders, as it made no sense to trade inside it, and it was dangerous beyond its limits. Now we have removed the 1.2577 level, so the signals should be more convenient. Overcoming this area was one of those "dangerous" signals that should not be used. It was formed during the announcement of the meeting's results and during Bailey's speech. Therefore, the right decision was to not enter the market. Then the price reached the 1.2507-1.2520 area, but this signal had not even formed when this article was written. As a result, novice traders should not have opened trades on Thursday.

On the 30-minute chart, GBP/USD has finally started to fall, but we don't know how long it will continue. The pound had solid reasons to fall, but on Friday or next week the market may well return to its favorite pastime of recent months - buying. We ourselves have long been expecting a fall in the British currency and are betting on this option. On the 5-minute chart, you can trade on the levels 1.2351-1.2367, 1.2433, 1.2507-1.2520, 1.2597-1.2616, 1.2659, 1.2697, 1.2772, 1.2860. 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, the UK is planning to publish reports on GDP for the first quarter and industrial data. Reports of moderate significance. In the US, we only have reports of secondary importance. Also, there will be several speeches by representatives of the BoE and the Federal Reserve during the day.

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.