Trading plan for GBP/USD on February 1. Simple tips for beginners

GBP/USD remained within the sideways channel of 1.2611-1.2787 on Wednesday, which isn't surprising. Although the British currency sharply grew during the day, it still wasn't enough for the pair to leave the flat range. The pair rose after the US ADP report, which showed fewer jobs created in the private sector than expected.

As we have already mentioned, the results of the FOMC meeting and Federal Reserve Chair Jerome Powell's speech is set to be announced on Wednesday, which is always interesting and important. It doesn't matter what Powell specifically says; volatility will still increase (or remain high) on Wednesday. Of course, if Powell takes a hawkish position, the dollar can quickly offset all the losses of the day. If Powell takes a dovish position, the dollar may fall further, but it will not be enough for the price to leave the 1.2611-1.2787 range.

The movements on the 5-minute timeframe were quite chaotic, but this time there was some logic behind them. The pound traded sideways, forming bounces from the level of 1.2688, before the US ADP report was published. It failed to fall by 20 pips in both cases, so the Stop Loss was not set to breakeven. When a buy signal formed, short positions were closed and longs were opened, bringing in a decent profit. Now, it is advisable to either close the longs or set the Stop Loss to breakeven, anticipating a stronger rise after the FOMC meeting.

On the hourly chart, GBP/USD is still trading within the sideways channel of 1.2611-1.2787. The fundamental and macroeconomic background on Wednesday, Thursday, and Friday is strong, but so far, it has not been enough to pull the pair out of the one-and-a-half-month flat.

The British pound will likely trade based on the results of the FOMC and Bank of England meetings. The pair's movements can be chaotic, volatile, and characterized by frequent reversals.

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, 1.2981-1.2993. On Thursday, attention will turn to the results of the BoE meeting. This is the most important event of the day, which can trigger a strong market reaction. In addition to this, the results of the FOMC meeting may be processed during the European session, as European markets did not have time to react to them on Wednesday. From the US docket, weekly Initial Jobless Claims and the important ISM Manufacturing PMI data will also be due.

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.