Trading plan for GBP/USD on July 24. Simple tips for beginners

The GBP/USD pair continued to trade lower on Tuesday. There was no macroeconomic or fundamental background to speak of, so the pound fell almost out of nowhere. This is quite rare these days. We see this decline as a sign that the market is finally ready to form a downtrend. We have mentioned before that the pound is unreasonably expensive and overbought. It should go through a noticeable bearish correction if the market intends to resume an uptrend later. From a technical perspective, the price has settled below the ascending trend line on the hourly chart, and this time, the pound's decline has begun. It will not be swift or severe, so quotes may rebound slightly upward this week before resuming the decline.

Trading could have been better on the 5-minute timeframe. Volatility once again left much to be desired and continues to decrease over time. Throughout the day, the pair only generated two sell signals, duplicates of each other. Initially, the price crossed the 1.2913 level very imprecisely and bounced back from it quite accurately. Therefore, traders could maintain their short positions on Wednesday, but today, the first macroeconomic data of the week will start coming in, so the pound may correct upward.

In the hourly timeframe, the GBP/USD pair finally has a chance of at least a minor decline. The pair has breached the ascending trendline, so we might see some correction. Ideally, the pound should drop by at least 400-500 pips. The market has already accounted for all growth factors multiple times, the dollar is undervalued, and the Bank of England may start lowering its rates soon.

On Wednesday, novice traders might consider trading from the 1.2913 level. The pair generated sell signals yesterday, so short positions remain valid. The pound could fall further if today's data from Britain and the US does not pressure the dollar.

The key levels to consider on the 5M timeframe are 1.2605-1.2633, 1.2684-1.2693, 1.2748, 1.2791-1.2798, 1.2848-1.2860, 1.2913, 1.2980-1.2993, 1.3043, 1.3102-1.3107, 1.3145. Today, Services and Manufacturing PMI data for July will be published in the UK and the US. These are not crucial reports, but there was no significant data in the first two days of the week either. Therefore, we expect the pair to show 50-60 pips of volatility today, which is quite good under the current circumstances.

1) The strength of a signal is determined by the time it took for the signal to form (bounce or level breakthrough). The shorter the time required, the stronger the signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be ignored.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.

4) Trades should be opened between the start of the European session and mid-way through the U.S. session. All trades must be closed manually after this period.

5) In the hourly time frame, 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 are too close to each other (from 5 to 20 pips), they should be considered as a support or resistance zone.

7) After moving 15 pips in the intended direction, the Stop Loss should be set to break-even.

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 that depict the current trend and indicate the preferred 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 source of signals.

Important 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 effective money management, is key to long-term success in trading.