Trading plan for GBP/USD on February 23. Simple tips for beginners

GBP/USD also showed quite high volatility on Thursday, but it traded with mixed movements. The British currency started the day by rising for illogical reasons. After the release of business activity index data in the UK, the pair fell and exhibited a fairly powerful decline. US PMI data stopped this decline and the dollar edged down. Thus, fairly mediocre values of the indices triggered strong movements, as the market has not received any kind of information since the beginning of the week.

The uptrend remains intact on the hourly timeframe, but it remains in a range (as seen on higher timeframes). Therefore, the pound is gradually growing, and in a couple of days, it may start to decline. And these movements are not related to any macroeconomic or fundamental background.

Several trading signals were generated on the 5-minute timeframe. In the morning, the price settled above the level of 1.2688, but did so literally 10 minutes before the release of UK data. Business activity indices in the UK are neither weak or disappointing, and yet it still managed to exert pressure on the pound. So the long position turned out to be unprofitable. However, traders could earn about 50 pips on the next buy signal, as the price reached the nearest target of 1.2611. They could also earn another 30-35 pips on the buy signal near this level. Therefore, the day ended with decent profit. When there is good volatility in the market, there are good trading signals and profits.

On the hourly chart, GBP/USD left the sideways channel of 1.2611-1.2787 and is desperately trying to start a downtrend. However, it is not going well. Currently, there is an ascending trendline on the hourly timeframe, but overall, the pound continues to trade sideways. In the medium-term, we only expect declines for the pound, but the market continues to trade the pair in the most 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 Friday, there are no important events or reports planned in the UK and the US, so we expect random movements and volatility to remain low.

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.