How to Trade the GBP/USD Pair on August 29? Simple Tips and Trade Analysis for Beginners

On Wednesday, the GBP/USD pair also showed a long-awaited decline, but it was so weak that the price did not even reach the trend line. Instead, a kind of "head and shoulders" pattern is currently forming on the chart. If the price bounces from the 1.3210 level, we could get a "second shoulder" and expect another fall in the British currency. Honestly, the pound should now fall without any basis or factors for many months—it rose so firmly and without reason in 2024. However, it is impossible to say exactly when such a movement will begin. The market could continue to price in the anticipated Federal Reserve rate cut. If the labor market and unemployment data are weak again next week, it might lead to speculation that the Fed will lower the rate by 0.5% on September 18. And it does not matter whether this is true or not. And it does not matter whether inflation allows the rate to be lowered at such a pace.

In the 5-minute time frame, several interesting trading signals were formed on Wednesday. At the opening of the European trading session, the price consolidated below the 1.3241 level and then bounced off this level three times from below. Therefore, novice traders could open short positions with a target below the 1.3210 level. Unfortunately, during the US trading session, we saw another rise in the pound out of nowhere, which caused the price to settle above the 1.3210 level. As a result, short positions had to be closed. Within half an hour, another sell signal was formed, which could also be executed and yielded a small profit.

In the hourly time frame, GBP/USD has a good chance of resuming the global downward trend, but a strong local uptrend is currently in progress. The British pound remains overbought, the dollar is undervalued, and the market continues to use every opportunity to buy the British currency and sell the dollar. It ignores all unfavorable reports and events. Even if there is no news, the market might continue purchasing the pair.

On Thursday, the pair might pull back slightly, but it is important for it to stay below the 1.3210 level. A bounce from this level will allow for the opening of new short positions, with the target being the trend line.

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, 1.3210, 1.3241, 1.3272, 1.3310. On Thursday, no interesting reports will be released in the UK, while in the US, the second estimate of GDP for the second quarter will be published. The market eagerly ignored the first estimate, which showed a value twice as high as the first quarter, so today, the dollar might only show growth based on technical grounds.

1) The strength of a signal is determined by the time it takes for the signal to form (bounce or level breakthrough). The less time it took, 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 form 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 midway through the U.S. session. After this period, all trades must be closed manually.

5) In the hourly time frame, trades based on MACD signals are only advisable amidst substantial volatility and an established trend confirmed by a trendline or trend channel.

6) If two levels are too close to each other (5 to 20 pips), they should be considered support or resistance.

7) After moving 20 pips in the intended direction, the Stop Loss should be set to break even.

Support and Resistance price levels: targets for opening long or short positions. You can place Take Profit levels near them.

Red lines: 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 movement of a currency pair. 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. Developing a clear strategy and effective money management is key to success in trading over a long period.