FX.co ★ How to trade GBP/USD on December 14. Simple trading tips and analysis for beginners

Analyzing Tuesday's trades:

GBP/USD on 30M chart

GBP/USD also traded with low volatility and there was no trend in the morning, but then it rallied in the afternoon, as the US inflation report was published, the value of which surprised traders and investors. Forecasts ranged from 7.3% to 7.6%, while the actual value was 7.1% y/y. We still consider core inflation to be the most important indicator. Anyway, the dollar collapsed after this report, and the pair even retained the flimsy uptrend that formed on Monday. The trend line has withstood the onslaught of traders from above several times, but you should understand that the pound's growth was provoked entirely by the inflation report. When the results of the Federal Reserve meeting are announced on Wednesday, the pair may already fall, and when the results of the Bank of England are announced on Thursday, it will grow again. It will be very difficult to predict the pair's movements in the next few days, since the market is not obliged to react to fundamental events in the way we consider necessary. In any case, settling below the trend line will allow the pair to adjust slightly.

GBP/USD on M5 chart

There were good trading signals for the pound. Just like the euro's case, two buy signals were formed at the European trading session near the area of 1.2245-1.2260. In the first case, the price failed to reach the target level and returned to its original positions. Therefore, the transaction closed at a Stop Loss at breakeven, as GBP passed 20 points to the upside. The second signal is a pure copy of a similar signal on the euro. Traders managed to set the Stop Loss to breakeven, so there was no risk before the release of the inflation report. And afterwards, the pair rushed up and simply "jumped over" 1.2329, 1.2337 and 1.2371. Unfortunately, it was not possible to reach 1.2471 and by the evening the price returned to 1.2371, where it was necessary to close long positions manually. The profit on them amounted to at least 100 points.

Trading tips on Wednesday:

The pound's movements on the 30-minute chart have been confusing, but the uptrend is still there. It is weak and uncertain, but it persists. The first "flight" this week has passed successfully, with at least two more "flights" ahead. And they can be in any direction. On the 5-minute TF on Wednesday, it is recommended to trade at the levels 1.2141, 1.2186-1.2205, 1.2245-1.2260, 1.2329-1.2337, 1.2371, 1.2471-1.2477, 1.2577-1.2597-1.2616. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. On Wednesday, an important report on inflation will also be published in the UK. The results of the Fed meeting will be published in the US. There might even be two "flights" on Wednesday. Beginners will have to leave the market before the results of the Fed meeting are announced. But if they have an open transaction with Stop Loss in the evening, then it can be left open.

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.