FX.co ★ How to trade GBP/USD on May 12? Simple tips for beginners.

Analysis of previous deals:

30M chart of the GBP/USD pair

The GBP/USD pair also continued to trade inside the horizontal channel on Wednesday. This is clearly seen in the chart. Unlike the euro currency, the pound did not even approach any of the channel's borders and did not try to overcome them. Thus, the pair remains in full flat, and the US inflation report did not help the pair complete it at all. In principle, the reaction to the inflation report was also quite expected. Since its value was not unexpected, we just saw a surge of emotions in the market, but no trend movement began. The pair initially fell by 100 points, and then rose by 100 points. That is, volatility remains high now, but only there is not much sense from this. The pound, like the euro, retains excellent chances of continuing to fall. Despite the fact that the Bank of England (BoE) has already raised the key rate four times, the pound cannot even "find the bottom" of the market at this time. Therefore, if the bulls do not buy the pair, then sooner or later the downward trend will resume.

5M chart of the GBP/USD pair

On the 5-minute timeframe, two trading signals were formed on Wednesday, almost identical to those formed for the euro. The first sell signal was formed near the level of 1.2379 and was almost perfect. After that, the price went down 87 points. And since a stop loss was to be set to breakeven after a 20-point down move on a short position, novice traders could catch almost all the downward movement. The profitability of this trade depends on where the newcomers choose to exit the market. The second sell signal was less accurate and could at first be mistaken for a buy signal. However, even if it was tempting to open a long position, it was not worth it, since the moment when the pair had overcome the 1.2379 level the pair had almost reached the next level of 1.2409. Therefore, in any case, it was necessary to open a short position when the price settled below the level of 1.2379. You could get about 30 points of profit on this transaction, and you had to leave it manually in the late afternoon.

How to trade on Thursday:

The downtrend is still maintained on the 30-minute timeframe despite the flat. The British currency can't do anything against the US dollar, and there are simply no bulls in the market. We see that even in those moments when the pound has a real chance of growth (like last week, when the BoE raised the rate), this currency still does not grow. On the 5-minute TF tomorrow it is recommended to trade at the levels of 1.2250, 1.2379-1.2409, 1.2477-1.2502. When the price passes after opening a deal in the right direction for 20 points, Stop Loss should be set to breakeven. A whole bunch of reports are scheduled for tomorrow in the UK, the really important one among which is the GDP report for the first quarter. Forecast +1.0% q/q We believe that the actual value may be lower than the forecast, in which case traders will have a new opportunity to sell the pound. Only a value above the forecast (which will be very unexpected) can help the British currency settle above the horizontal channel.

Basic rules of the trading sytstem:

1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.

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

3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.

5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.

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

The MACD indicator (14,22,3) 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 lines (channels and trend lines).

Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, 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.

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