Trading plan for GBP/USD on October 16. Simple tips for beginners

GBPUSD slipped further on Friday. The price settled below the ascending trendline, and the pound's decline was not related to any fundamental or macroeconomic factors. Therefore, both the euro and the pound moved identically on Friday. This was in the absence of any significant events in the UK. In the United States, the University of Michigan's consumer sentiment index was published, which was 5 points lower than the forecast and the previous reading. However, this report had no impact on the dollar either.

Therefore, we can draw one conclusion: the market bought the dollar and sold the euro by using Thursday's US inflation data as a reason to execute its plan on Friday. The dollar did not have any compelling reasons to rise on both days.

There were two trading signals on the 5-minute chart. First, the pair tried to bounce from the 1.2164-1.2179 area, but the price couldn't even move 20 pips in the right direction. Therefore, when a sell signal was formed in the same area, the long position had to be closed at a loss of about 35 pips. Immediately after that, short positions had to be opened. The sell signal was more successful, and by the end of the day, the pair fell by about 25-30 pips, making it possible to pare losses from the first trade. In conclusion, it wasn't the best day to trade.

On the 30-minute chart, GBP/USD may resume its downtrend in the medium-term. We were expecting a stronger bullish correction, but that doesn't seem to be the case... At least for now, we don't see any reasons for a strong upward movement. The market had a reason to buy the dollar. The key levels on the 5M chart are 1.1992-1.2010, 1.2052, 1.2107, 1.2164-1.2179, 1.2235, 1.2270, 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 Monday, the Bank of England's Chief Economist Huw Pill will speak. No other interesting events scheduled for the day.

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.