Trading plan for GBP/USD on February 21. Simple tips for beginners

The GBP/USD experienced an upward movement on Tuesday. Unlike the EUR/USD pair, the British currency had a fundamental background, but the market interpreted it quite strangely. Bank of England Governor Andrew Bailey gave a speech, which was the only significant event of the day. We can assume that the pound's growth was associated with Bailey's statements, if not for one "but." Bailey spoke more about the prospects of a rate cut and also took note of the decline in the UK economy. In other words, the market should have reacted by selling the pound instead of buying it.

However, the illogical movements have ceased to surprise recently. The pair has been moving mostly sideways for more than two months, so local movements are chaotic and illogical. The pair has overcome the descending trendline, a new ascending trendline has formed, and in general, we're still seeing a flat phase.

Two signals were generated on the 5-minute timeframe, but due to the erratic movements, it was quite difficult to make good profit on Tuesday. Initially, the pair bounced off the 1.2605-1.2611 area but failed to fall by 20 pips, which would have been enough to set the Stop Loss to breakeven. Afterward, it breached this area upwards, but the price could not reach the nearest target of 1.2688, and then it started a fairly strong decline. Therefore, in the evening, the long position could be manually closed with a minimal profit, which was just enough to cover the loss from the first trade.

On the hourly chart, GBP/USD left the sideways channel of 1.2611-1.2787 and is making every effort to start a downtrend. However, it is not going well. Currently, there is an ascending trendline on the hourly timeframe, which was descending on Monday, and obviously, there is no clear trend. In the medium-term, we only expect declines for the pound, but the market continues to trade the pair in a highly chaotic and illogical manner.

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 Wednesday, there are no important events lined up in the United Kingdom. In the United States, the FOMC minutes will be published late in the evening. This is certainly an interesting event, but it is unlikely to provide significant information.

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.