Trading plan for GBP/USD on August 31. Simple tips for beginners

On Wednesday, the GBP/USD pair also extended its upward movement, which was also triggered by weak US data. As we mentioned, two reports, which we frankly didn't place much faith on, turned out worse than expected and fueled a US dollar selloff. However, at the beginning of the week, we had already warned you that the pair might start a correction this week, that the macroeconomic backdrop would be strong and it didn't necessarily have to support the dollar. In practice, that's exactly how it's playing out. So far, the three most influential reports have been, if not outright disappointments, then weak, and the US currency has been losing ground for two days straight.

It would be pointless to discuss the current technical picture, because a new uptrend is brewing and it might be short-lived. Even if the dollar drops the entire current week, it will need new factors to continue that trend next week. And news and reports won't always be unfavorable for the dollar every week, nor will they simply be present every week.

We saw a good amount of trends and trading signals on the 5-minute chart. At the beginning of the European session, the price bounced off the 1.2620 level twice, afterwards it rose for almost the entire day, reaching the 1.2748 level. The "shortfall" was only 3 pips, which is an acceptable margin of error for this pair. Thus, when bouncing off the 1.2748 level, one should have closed long positions and opened short ones. Profits from the longs amounted to about 100 pips. Profits from the shorts were an additional 20-30 pips. In general, it was quite a profitable day.

On the 30-minute chart, the GBP/USD pair also started a bullish correction influenced by the macroeconomic backdrop. We're still leaning towards a further decline in the British pound, believing it's currently overbought and unjustifiably pricey. So now we need to wait for the correction to end and the return of the downtrend, which has already lasted one and a half months. The key levels on the 5M chart are 1.2457, 1.2488, 1.2543, 1.2605-1.2620, 1.2653, 1.2688, 1.2748, 1.2787-1.2791, 1.2848-1.2860. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Thursday, Bank of England's Chief Economist Huw Pill will speak, and in the US, reports on personal income and public spending will be released. Both events are quite standard, and there's only a small chance of a market reaction.

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.