FX.co ★ How to trade GBP/USD on February 10. Simple trading tips and analysis for beginners

Analyzing Thursday's trades:

GBP/USD on 30M chart

GBP/USD also continued its correctional movement on Thursday, although it had been flat for three days. Take note that Huw Pill, Chief Economist of the Bank of England, and BoE Governor Andrew Bailey just spoke at the Treasury Select Committee. We will consider their comments later on in the fundamental articles, but under first impressions, it seems like they did not say anything that could support the pound. In fact, I think we heard some hints that the BoE is not yet able to cope with high inflation, and that further rate hikes are an open question. Nevertheless, the market considered these events from a bullish perspective, so the pound went up. Moreover, I thought a bullish correction was about to take place following the 4-day plunge. On Friday, the UK will release interesting reports on Industrial Production and GDP for the fourth quarter. It is quite possible that if the forecasts coincide with the actual values, there will be no reaction. Nonetheless, we should still consider the fact that there might be a reaction, starting in the morning. Therefore, we should be prepared for such developments.

GBP/USD on M5 chart

There were several trading signals on Thursday. First, the pair overcame the 1.2079-1.2109 area, after which it overcame the 1.2171-1.2179 area. In the first case, we should have opened long positions, and when the price fell below the second area, we should have closed the long positions, as it was a sell signal. The profit obtained on this deal was about 35 pips. Not much, but better than nothing. It was not necessary to price a sell signal since it was formed late enough by time. During the day, there was a trend movement, but it is rather an exception, provoked by a relatively important fundamental event.

Trading tips on Friday:

On the 30-minute chart, GBP/USD started a bullish correction, but everything will be decided for the pound on Friday. I think that the pound should continue to fall a few hundred pips more, so we expect a reversal. On the 5-minute chart, it is recommended to trade at the levels 1.1950-1.1957-1.1961, 1.2065-1.2079, 1.2109, 1.2171-1.2179, 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. The UK Industrial Production and GDP reports will be released on Friday. This data is quite important, so do not ignore it. The market may react to them during European and US sessions. The US will release the Consumer Sentiment index from the University of Michigan and we also have speeches of Federal Reserve representatives.

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.