Trading plan for GBP/USD on February 29. Simple tips for beginners

GBP/USD showed quite chaotic movements within the day. There is clearly a flat trend on almost all the higher timeframes. However, we're still seeing weak and erratic movements on the 5-minute timeframe. For instance, on Wednesday, volatility was around 60 pips. The day started promisingly. The pair only moved in one direction, precisely by 60 pips, but this movement started overnight, making it quite problematic to trade.

In the second half of the day, the pair started moving in all directions, although there was very little macro data. In general, we only saw the U.S. GDP report, which put pressure on the U.S. dollar. However, we saw many intraday reversals, which made it quite challenging to trade. The upward trendline has been broken, so we can expect the pound to fall further.

A great number of signals were generated on the 5-minute timeframe, all around the level of 1.2648, and all of them were false signals. The price could not hit any of the nearest levels due to low volatility and constant reversals. Therefore, beginners may have tried to execute the first two signals marked in the chart above. The first trade closed very quickly at a small loss. The second trade, with a Stop Loss, closed at breakeven.

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. We expect the pound to fall, but the market continues to trade the pair in a chaotic and illogical manner. The uptrend has been disrupted, so we can expect a new short-term downtrend, but movements can be quite chaotic.

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, 1.2648, 1.2691, 1.2725, 1.2787-1.2791, 1.2848-1.2860, 1.2913, 1.2981-1.2993. On Thursday, there are no important events lined up in the UK. The US will release several less important reports that are unlikely to provoke a strong market reaction. However, there is a shortage of significant events this week, so even secondary data can influence the pair's movements.

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.