Trading plan for GBP/USD on May 18. Simple tips for beginners

The GBP/USD pair attempted to continue its downward movement on Wednesday, but by the end of the day, it corrected upwards more strongly than it had dropped earlier. The descending trend line has been slightly readjusted, as we mentioned, and today the pair reached it but failed to break through the 1.2507 level. Thus, a resumption of the British pound's fall can be expected tomorrow. We still believe that a drop is the most likely and logical scenario. However, breaching both the trend line and 1.2507 level would bring bulls back into the market, and the pound could resume its illogical rise.

Today, Bank of England Governor Andrew Bailey gave a speech in the UK. This is a relatively rare event, but there were no resonant statements. The pound appreciated in the second half of the day, so it can be assumed that the market favorably reacted to the BOE head's speech. However, it's difficult to call Bailey's speech "hawkish". The market reaction could easily have been the opposite. Specifically, Bailey stated that inflation will be declining for the remainder of the year, clearly hinting that the regulator does not intend to raise rates for a while yet.

There were several trading signals on the 5-minute timeframe on Wednesday, but the segment around the 1.2434 level spoiled it all. The pair managed to form four signals around this level in an hour and a half, three of which turned out to be false. Therefore, novice traders could only execute the first two, likely resulting in a minor loss. Profit from the EUR/USD pair probably partially offset this. The pound also continues to move in a less than ideal manner, but its volatility is higher than the euro's. Today, traders were simply unlucky, as the upward movement eventually started and the target level of 1.2507 was perfectly hit.

On the 30-minute timeframe, the GBP/USD pair continues to fall, but it's unknown how long this will last. The trend line again supports bears and the US dollar, but the pair may break it as early as tomorrow. The pound isn't showing the same eagerness to fall as the euro. There's a fear that the rise may resume, but it will be illogical. On the 5M timeframe tomorrow, traders should pay attention to the levels of 1.2245-1.2260, 1.2351-1.2367, 1.2434, 1.2507-1.2520, 1.2597-1.2616, 1.2659, and 1.2697. When the price moves in the correct direction by 20 pips after opening a trade, a breakeven Stop Loss can be set. On Thursday, no important events or publications are scheduled in the UK or the US. Volatility might decrease again, and the movement could be purely technical.

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 levels 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.

Beginning traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.