FX.co ★ How to trade GBP/USD on December 21. Simple trading tips and analysis for beginners

Analyzing Tuesday's trades:

GBP/USD on 30M chart

GBP/USD showed absolutely identical movements to EUR/USD. However, this should not surprise you, since the market is now in a total flat. If both pairs are trading flat, then it is logical that they show almost the same movements. There were no reports or events in the UK and the US, so there was nothing to react to again. Formally, the bearish correction will continue once the price has fallen below the ascending trend line. However, this movement seems more like a flat. Take note that traders ignored the 1.2141 level. We got a flat with a planned, minimal decline, which is even worse than a flat in the horizontal channel. In general, trading conditions are now unfavorable, which should be taken into account.

GBP/USD on M5 chart

There were plenty of trading signals on the 5-minute chart. Let's try to figure out how to trade and whether it was possible to make a profit. The first sell signal turned out to be quite good, the price almost dropped to 1.2079, but it didn't work out, so you could gain profit if the short position was manually closed, but we believe that the Stop Loss worked at breakeven. This was followed by a buy signal around 1.2141, after which the pair reached the target level of 1.2186 – 16 points of profit. The rebound from 1.2186 should have been used to open shorts, after which the pair returned to 1.2141 – another 19 points of profit. The rebound from 1.2141 should have been used again to open longs, but this time GBP did not reach 1.2186 – the deal closed at a Stop Loss at breakeven. This was followed by another sell signal around 1.2141, but the price failed to reach 1.2079, so this was closed at a Stop Loss at breakeven. The remaining signals around 1.2141 should no longer be used. As a result, we managed to close the day with a small profit.

Trading tips on Wednesday:

On the 30-minute chart, the pound/dollar pair has a real chance of a downtrend since GBP has finally crossed the ascending trend line. However, it appears like the movement seems more like a flat. I believe that the pound may continue to fall, despite the upcoming holidays, but there is also a high probability of a flat. On the 5-minute TF on Wednesday, it is recommended to trade at the levels 1.1950-1.1957, 1.2064-1.2079, 1.2141, 1.2186-1.2205, 1.2245-1.2260, 1.2337-1.2343. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. No important events planned in the UK and the US again. We'll just have to wait for the downward movement.

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.