Trading plan for GBP/USD on August 28. Simple tips for beginners

On Friday, the GBP/USD pair tried to start a correction but faltered before the 1.2620 mark. This level had long served as the lower band of the sideways channel and now, as we can see, it's resisting the price from above. However, on Friday, the pair's movement largely depended on the fundamental background. Essentially, the only significant event of the day was Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium, where he announced that the rate could potentially be raised once more in subsequent meetings.

Essentially, these words fully align with the Fed's general plan, which slowed its pace of monetary tightening to one hike every two meetings a few months ago. Thus, if US inflation does not plummet by the end of August, we might see a pause in September. Nevertheless, Powell's stance can still be deemed hawkish, causing the dollar to strengthen in the second half of the day.

There were several trading signals on the 5-minute chart, but it was quite challenging to execute them due to the heightened volatility during Powell's speech, so it was hard to time the trades. In principle, none of the signals should have been executed. The first sell signal around the 1.2605-1.2620 area formed half an hour before Powell's speech, making it risky to enter the market. Subsequent sell signals were formed in the same area and around the 1.2653 level. Given Powell's hawkish stance, one could have opened a short position, but as reiterated, it was generally challenging to act on time. Those who managed to act in time using short positions earned a modest profit.

On the 30-minute chart, the GBP/USD pair broke out of the sideways channel and may now continue the downward movement. We're still leaning towards a further decline in the British pound, believing it's currently overbought and unjustifiably pricey. The macroeconomic backdrop will be quite strong, so the pound could move in either direction. The key levels on the 5M chart are 1.2372, 1.2457, 1.2488, 1.2543, 1.2605-1.2620, 1.2653, 1.2688, 1.2748, 1.2787-1.2791. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Monday, there's nothing particularly noteworthy slated in the UK and the US. There won't be any reports or events to react to during the day, so volatility might decrease again.

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.

Beginners 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.