FX.co ★ How to trade GBP/USD on March 23, 2022. Simple trading tips and analysis for beginners

Analyzing trades on Tuesday

GBP/USD on 30M chart

The GBP/USD pair unexpectedly surged on Tuesday. At the time of writing, the pair went up by 150 pips from the daily low. Notably, the pair was steadily falling in the early hours of trading. However, at the beginning of the European session, market participants started to buy up the British pound despite the lack of any significant economic reports. Moreover, hardly any statistics could have provoked such a movement of 150 pips. Despite the trend movement during the day, the technical picture was still uncertain. The price managed to overcome the trendline during the night trading, which meant the end of the uptrend. However, just a few hours later, it began a strong upward movement. At least, the pair tested the levels very accurately. Thus, despite breaking through the trendline, the uptrend remains in place, while the trend line itself is no longer relevant.

GBP/USD on 5M chart

On the 5-minute time frame, the technical picture looks perfect. We could observe precise testing of the levels, a strong trend movement, and clear trading signals. Thanks to the British pound, novice traders could offset the losses from trading the euro/dollar pair. Let's start with the signals. The first one was formed at the beginning of the European session - a rebound from the level of 1.3126. After that, the pair began to grow rapidly and easily overcame the levels of 1.3210 and 1.3241, stopping only near 1.3272. Then, it made a very accurate rebound from it. This is when beginners were supposed to take profit on a long position. The profit could be at least 120 pips. On a rebound from the level of 1.3272, it was also possible to open a short position. However, as the price failed to overcome the level of 1.3241, the trade should have been closed immediately. Even in this case, this trade brought a profit of 10 pips. Traders could have also opened a long position on a rebound from the level of 1.3241. Yet, the pair lost momentum, so the trade had to be closed manually by the end of the session. This trade also brought us a small profit. As a result, today, beginners could experience all the benefits of a trend movement.

Trading tips on Wednesday

On the 30-minute time frame, the pair continues its upward movement, which is no longer supported by the trendline. The price managed to overcome the level of 1.3210 on the third attempt, so the pound may continue to grow in the near future. The fact the pound showed such a strong rise without any obvious reason is a little alarming. Tomorrow, traders may change their mind and sell the pound as rapidly as they bought it today. On the 5-minute chart on Wednesday, it is recommended to trade at the levels of 1.3082, 1.3110-1.3126, 1.3210, 1.3241, 1.3272, 1.3310, and 1.3365. Place a Stop Loss to breakeven as soon as the price passes 20 pips in the right direction. Tomorrow, the UK will release the inflation report which can change the market sentiment. Besides, Jerome Powell and Andrew Bailey will speak tomorrow, possibly giving important hints to the market. Therefore, the trajectory of the pound/dollar pair may be rather uneven on Wednesday.

Basic rules of the trading system

1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.

2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.

3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.

4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours, when all positions must be closed manually.

5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.

On the chart

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

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

The MACD indicator (14, 22, and 3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend patterns (channels and trendlines).

Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.