Trading plan for GBP/USD on March 20. Simple tips for beginners

GBP/USD also continued to trade lower within the bearish channel on Tuesday. However, throughout the day, the pair managed to both fall and rise by approximately the same number of pips. Moreover, the pound did not have a solid reason to rise, especially considering that the US reports turned out to be stronger than expected. However, it's become somewhat customary for the pound to show growth even when it has no reasons to do so. Yesterday's movement could be attributed to a technical correction since there is still an underlying uptrend.

In terms of the macroeconomic backdrop, there were no significant developments in the UK. However, in just a few hours, Britian will release a crucial inflation report for February. Therefore, the pair could easily exit the descending channel if the report's value exceeds expectations. In the evening, the FOMC meeting will take place, which could and should provide support for the US dollar.

Several trading signals were generated on the 5-minute timeframe. Initially, the pair bounced off the level of 1.2725, and traders could open short positions. Then the pair breached the level 1.2691, but afterwards, the pound failed to fall further and consolidated back above this level. Consequently, short positions should have been closed and long positions opened. By the end of the day, the pair returned to the level of 1.2725, where long positions should have been closed. The profit from the two trades amounted to approximately 25 pips.

On the hourly chart, GBP/USD has finally started to move downward. Since the pound doesn't have any logical reason to rise further, we encourage the British currency's decline. However, it is extremely difficult to confirm whether the market has turned firmly bearish. The pound is still too high, and it has been that way for too long, which suggests that the bullish bias persists.

The key levels on the 5M chart are 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 Wednesday, the UK will publish the Consumer Price Index data. On the central bank front, the results of the FOMC meeting, a speech of Federal Reserve Chair Jerome Powell, and updated forecasts for interest rates will be the highlights. These events should be enough to push traders to become more active.

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.