FX.co ★ How to trade GBP/USD on February 10, 2022. Trading tips and analysis for beginners

Analysis of Wednesday's trades:

30M chart of GBP/USD

The GBP/USD pair traded more actively than EUR/USD on Wednesday. However, the price did not leave the sideways channel and kept trading in the 1.3488-1.3580 range. After it had bounced off the cannel's upper limit, a sell signal was produced. Thanks to the strong level of 1.3580, the pound/dollar pair went down by 50 pips from the low to the high. Given the current volatility level, it was a rather nice move. So, what can we expect from it? Like in the case of EUR/USD, we can expect nothing due to the empty macroeconomic calendar and the absence of any fundamentals. The market is likely to remain flat at least until any reports are published or any events unfold.

M5 chart of GBP/USD

In the M5 time frame, trading was extremely difficult. The levels of 1.3563 and 1.3580 stood as resistance. The novice were warned yesterday that as soon as the first signal indicating a flat occurred, they should no longer enter the market. Moreover, the pair had moved sideways for a couple of days and had traded in the range between 1.3563 and 1.3580 for 6 hours. As soon as it approached 1.3563, the movement was supposed to become more evident. However, beginners were still unable to enter the market due to the fact that the signal had been produced too late. By that time, the market had already turned flat again and volatility had been at a low level. In addition, that signal could be called neither strong nor accurate. Technically, the novice could have opened short positions. If they did, they earned a profit of 5-10 pips.

Trading plan for Thursday:

In the 30M time frame, the downtrend has emerged. The pair has traded in the sideways range between 1.3488 and 1.3580 for 4 days. The quote may leave the cannel when the US inflation report is released. If not, it may happen on Friday after the publication of important statistics in the United Kingdom. The target levels in the 5M time frame are seen at 1.3431-1.3439, 1.3488, 1.3563-1.3580, 1.3598-1.3603, and 1.3652-1.3660. A stop-loss order should be placed at the breakeven point after the price has passed 20 pips in the right direction. The United Kingdom's macroeconomic calendar will be empty on Thursday. Meanwhile, inflation in the United States is estimated to hit the 40-year high of 7.3% y/y. The greenback may strengthen versus the euro and the sterling due to continuing inflation. All in all, traders should prepare for any outcome because the actual result may differ from the market forecast.

Basic principles of the trading system:

1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.

2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.

3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.

4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.

5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.

6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.

On charts:

Support and resistance price levels can serve as targets when buying or selling. You can place Take Profit near them.

Red lines are channels or trend lines that display the current trend and show which direction is better to trade.

MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.

Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginner traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management is the key to success in long-term trading.