Trading plan for GBP/USD on May 7. Simple tips for beginners

The GBP/USD pair also tried to continue its upward movement on Monday, which has been ongoing for several weeks, but the price failed to reach its recent local high near the 1.2611 level. This is quite good because even if the recent US macro data have been disappointing, the fundamental background still remains in favor of the US dollar. The British pound has been rising for too long over the past year and has stayed at peak levels for too long instead of showing a decline. Therefore, we still expect the pound to fall, especially now that the price has breached the ascending trend line.

There were no significant events on Monday. Therefore, volatility was quite weak. However, the Bank of England meeting is scheduled for this week, so the market may become more active as early as today. Market participants often begin to anticipate the central bank meeting in advance.

A buy signal was formed on the 5-minute timeframe. Early in the morning, the price bounced off the range of 1.2541-1.2547, so novice traders could open long positions. Throughout the day, the pair managed to rise by about 30 pips, but it couldn't reach the nearest target area. By the end of the day, it returned to the area where the signal was formed, so it wasn't possible to earn much from this trade. This was also unlikely because volatility was weak on Monday.

On the hourly chart, the GBP/USD pair has excellent prospects for forming a downward trend, but is currently going through a correction. This corrective phase has been quite strong and it appears logical. The fundamental backdrop continues to support the dollar much more than the British pound. Therefore, we only expect downward movement from the pair.

On Tuesday, investors can initiate trade from the range of 1.2541-1.2547. Traders may open new long positions while aiming for 1.2605 once the price rebounds from the aforementioned range. If the price consolidates below this mark, it may signal the beginning of a new downtrend, so in this case, short positions can be opened with 1.2502 as the target.

The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2541-1.2547, 1.2605-1.2611, 1.2648, 1.2691, 1.2725, 1.2787-1.2791. Today, there are no scheduled events or reports in the UK and the US. Therefore, we don't expect strong 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.