FX.co ★ How to trade GBP/USD on March 17, 2022. Tips and trades analysis for beginners

Analysis of Wednesday's trades:

30M chart of GBP/USD

The corrective move on GBP/USD continued on Wednesday. The price tested the descending trend line by the end of the day. However, it was the trend line that approached the price, and not vice versa. So, the correction is still weak. The pound/dollar pair might show sharp movements and frequently reverse on Thursday due to the Fed and BoE meetings. Naturally, given such a fundamental background, it is impossible to assume in what direction the price will go in the next 24 hours. Therefore, the novice should not enter the market until both meetings are over and the market digests their outcomes.

M5 chart of GBP/USD

In the M5 time frame, the technical picture does not look very nice. Due to volatility of about 80 pips, the price traded sideways during the day. Overall, a few trading signals were made on Wednesday. All of them were made near the 1.3082 level. The price broke through the mark and then bounced from it four times. The novice would have highly unlikely made any profit. The pair went up by about 20 pips every time but could not consolidate below 1.3082 even once. Therefore, all trades opened on Wednesday had to be closed manually and most likely at the breakeven point. The Federal Reserve announced it would raise rates by 0.25%. The Bank of England may well do the same.

Trading plan for Thursday:

In the 30M time frame, the pair finally tested the trend line. Due to the FOMC meeting, it is hard to tell whether the price will be able to extend growth if it breaks through the trend line. The technical picture might become clearer as earlier as by the end of Thursday. The target levels in the 5M time frame are seen at 1.3000, 1.3026, 1.3082, 1.3124-1.3134, and 1.3193. A stop-loss order should be set at the breakeven point as soon as the price passes 20 pips in the right direction after a trade has been opened. The Bank of England monetary policy meeting will be the central event of the day. At the same time, the pair might still trade under the influence of the FOMC meeting. Overall, Thursday might be a volatile day in the market. Therefore, traders should be extremely cautious when trading the instrument.

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.

How to interpret charts:

Support and resistance 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.