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

Analyzing Thursday's trades:

GBP/USD on 30M chart

GBP/USD continued its downward movement on Thursday, which intensified during the day. Even in the 30-minute chart, you can see that the price perfectly reached two important levels. In addition, it perfectly bounced off the descending trend line, forming a sell signal and maintaining the downtrend. As a whole, the pound continues to correct after several months of growth, which, from my point of view, is very logical and reasonable. The UK just published its third quarter GDP report, which was worse than forecasts, and the US third quarter GDP report, which was better than forecasts. I did not expect such a strong reaction to these reports, but you have to admit that both were showing the same direction on the currency pair's chart, and both were unexpected. In addition, the technical picture is supporting the US currency now, so as many as three factors were working for the USD on Thursday. I expect GBP to fall further.

GBP/USD on M5 chart

There were two trading signals on the 5-minute chart on Thursday, but novice traders could open only one position. In the middle of the European session, the price rebounded from 1.2141, and then fell by about 150 pips, breaking through 1.2064-1.2079. Therefore, you should have kept the position until the rebound at 1.2008 and closed after the rebound from this level. The profit on the short position was at least 90 pips, which is an excellent result. The buy signal near 1.2008 should not have been used because it appeared late. But even if newcomers opened the longs, they were also profitable, as the pair went up several dozens of points as well.

Trading tips on Friday:

GBP/USD continues to move down after the pound crossed the ascending trend line. So at least we see some movement there and you can also earn quite a bit. Volatility is falling with the holidays approaching, so it is necessary to seize the moment, especially as the signals are strong and profitable. On the 5-minute chart on Friday, it is recommended to trade at the levels 1.1793, 1.1863-1.1877, 1.1950-1.1957, 1.2008, 1.2064-1.2079, 1.2141, 1.2186-1.2205, 1.2245-1.2260. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. On Friday, there are no important events in the UK, and in the US there are some reports that aren't really significant, like personal income and expenditures and durable goods orders. Since the pound/dollar pair is not in a flat, these reports can be used to open new trading positions by traders.

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.