Trading plan for GBP/USD on December 20. Simple tips for beginners

GBP/USD was sharply higher on Tuesday. The British pound continued to fall on Monday, although there were no macroeconomic and fundamental reasons behind it. The British currency showed an impressive growth on Tuesday, although there were no grounds for it either. Thus, the pound is currently fluctuating back and forth, and it is almost impossible to predict these movements. The uptrend remains intact, but that does not mean the pound can rise every day. We still believe that the most logical option is for the pair to fall to the trend line and surpass it.

In the UK, the first interesting reports will be released on Wednesday. In the first two days of the week, there were several speeches by representatives of the Federal Reserve and the Bank of England, but they did not report anything crucial. This is not surprising, as the BoE and Fed meetings were held last week, and the market received all the necessary information. Recall that the BoE's stance was much more hawkish last week, which triggered the pound's rise. But this week, the pound did not have any reason to strengthen, so it remains a mystery as to why the pair is trading higher.

On the 5-minute chart, three trading signals were generated. The pound started to rise early in the morning. The first level to overcome was 1.2688, where beginners could open long positions. Afterwards, it surpassed the level of 1.2723, and the price stayed above this mark for the rest of the day. Long positions could be manually closed in the evening, since there were no sell signals. The profit was about 40 pips.

On the hourly chart, GBP/USD has resumed its uptrend, but it has been difficult to answer why the pair is moving this way. Last week, the British pound had specific reasons to rise, but it no longer has any of those this week. And it is unlikely that the pair will gain such reasons this week, so it would be logical for the pair to return to the 1.2502 level.

On Wednesday, we advise you to closely monitor the level of 1.2725 and the area of 1.2787-1.2791. If the price consolidates below the first, this will be a reason to sell the pair with 1.2611 as the target. If the pair bounces off the area of 1.2787-1.2791, this will also be a reason to sell. You could buy when the pair bounces from the level of 1.2725 from above with 1.2787-1.2791 as the target.

The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2544, 1.2605-1.2611, 1.2688, 1.2725, 1.2787-1.2791, 1.2848-1.2860, 1.2913.On Wednesday, the first important report of the week will be released in the UK - November's inflation figures. UK inflation reports are released with just one estimate, so the market reaction should be significant. If inflation falls more than forecasts, this will be an opportunity for us to expect a decline. If inflation is higher than forecast, the pound may continue to rise.

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.

Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.

The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.

Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.