Trading plan for GBP/USD on October 3. Simple tips for beginners

GBPUSD continued to decline on Monday. Similar to the EUR/USD pair, we believe that this movement was somewhat unusual because the correction at the end of the previous week was quite weak, especially if we consider the fact that the pound has fallen by 1,000 pips in the last two months. We clearly expected a stronger upward movement. Also, there was no macroeconomic or fundamental backdrop that unequivocally supported the US dollar on Friday or Monday. We can acknowledge the fact that the US Manufacturing PMIs were at a decent level, exceeding expectations and almost returning to the area above the 50.0 level. However, the dollar was already rising even before the reports were released, and the British index wasn't so bad that the pound should have fallen. In general, we believe that Monday's movements were illogical.

On the 5-minute chart, there were several trading signals and the movements were quite chaotic. Starting with the fact that the British pound moved higher in the morning and that this was even before the PMIs were published. Unfortunately, beginners couldn't make a profit using the buy signal since the price did not reach the target level. Then the pair returned to the 1.2171-1.2179 area and fell below it. This was a sell signal and the short position should've been held until the evening, as there were no buy signals. Accordingly, it had to be manually closed, and the profit on it was about 50 pips. The first trade had a breakeven profit.

On the 30-minute chart, GBP/USD has ended its bullish correction and can now resume its downward movement. However, we believe that the pound may trade higher for quite some time, even without specific fundamental and macroeconomic reasons behind it. After that we expect it to resume its decline as the pound has been rising for too long and without a solid basis. The key levels on the 5M chart are 1.1992-1.2010, 1.2065-1.2079, 1.2143, 1.2171-1.2179, 1.2235, 1.2307, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, 1.2688. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Tuesday, the only notable report is the Job Openings and Labor Turnover (JOLTS) in the US. This is an important report so it should be sufficient to stir some 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.