Trading plan for GBP/USD on February 8. Simple tips for beginners

GBP/USD continued to correct higher against the decline we witnessed on Friday and Monday. During those days, there were substantial reasons for the pair to fall. However, on Tuesday and Wednesday, the British currency has shown purely technical growth. There is nothing inherently wrong or unusual with such movements, but if this is a correction, it should end this week. Afterward, we expect the downward movement to resume.

The pair traded in a sideways channel for a month and a half. It currently has real prospects of returning to this sideways channel. Naturally, traders and everyone else would prefer to avoid this scenario. However, the fact that the price has settled above the 1.2611 level means that we can expect it to rise to the level of 1.2787. On Wednesday, there were no significant events in either the UK or the US. Thus, the macroeconomic backdrop had no impact on traders' preferences.

The movements on the 5-minute timeframe were weak. The pair moved about 50 pips from the day's low to the high, which is quite low for the British pound. A buy signal was formed in the area of 1.2605-1.2611 during the European trading session, but after that, the price struggled to rise by over 20 pips. The market failed to return to the 1.2605-1.2611 area or reach the nearest target. Therefore, traders could close the long position with a small profit or set a Stop-Loss below 1.2605 and hope that the pound rises further.

On the hourly chart, GBP/USD left the sideways channel of 1.2611-1.2787, but has now returned to it. Last week as well as Monday's fundamental and macroeconomic background only supported the dollar, so it was only logical for the downtrend to start. However, the downtrend must continue. If the price does not settle below the 1.2605 level in the coming days, the pound may exhibit a similar rise.

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, there are no important events or reports lined up in the UK and the US. US unemployment claims rarely deviate significantly from forecasts, so we do not expect strong reactions to this report. It is going to be another day, and the market will trade purely on technicals.

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.