FX.co ★ Trading plan for GBP/USD on April 25: analysis of trades and simple tips for beginners

Analysis of Monday's trades

GBP/USD 30M Chart

On Monday, the GBP/USD currency pair also attempted to resume its upward movement, but it fared worse than the euro. The pound lacked momentum to take any definite direction on Monday, so it had no other choice than moving sideways. The euro was influenced by Wunsch's speech at least, whereas the pound lacked even that. Nonetheless, the European currency dragged the pound upward, so it also demonstrated a slight increase. There isn't much else to note about the market developments on Monday. The flat trend may end soon, but there are no solid reasons for a new wave of growth. Moreover, last week's macroeconomic data from the UK turned out weaker than expected. While the pound didn't fall, its theoretical growth would be illogical. No clear trend can be identified on the 30-minute timeframe, although the long-term uptrend remains intact.

GBP/USD 5M Chart

Trading signals on the 5-minute timeframe were terrible on Monday. Beginner traders were somewhat lucky, as the false signals could be identified in advance. The first sell signal around the 1.2444 level formed overnight, allowing a short position to be opened at the start of the European trading session. The price dropped by 21 pips, which was enough to set a break-even stop-loss, closing the trade since the target level of 1.2396 wasn't reached. Another sell signal appeared around the same 1.2444 level, which also turned out to be false. A break-even stop-loss couldn't be set for this signal, leading to a small loss when the pair settled above the level. All subsequent signals around 1.2444 should have been ignored, as the first two were false, and there were many of them.

Trading plan on April 25

On the 30-minute timeframe, the GBP/USD pair appears to have already completed a downward correction, which turned out to be too weak once again. We still expect the pound to experience a significant drop of several hundred pips, but the market continues to resist the selling pressure. The 1.2444 level has become invalid by the end of the day, with the new target at 1.2466 formed instead. On the 5-minute timeframe, the key levels for tomorrow can be found at 1.2171-1.2179, 1.2245-1.2260, 1.2343-1.2360, 1.2396, 1.2466-1.2477, 1.2520, and 1.2577-1.2597-1.2616. When the price moves in the correct direction by 20 pips after opening a trade, a break-even stop loss can be set. On Tuesday, no significant events are scheduled in the UK and the US, so volatility may remain low, so there is unlikely to be any definite trend movement.

The basic rules of the trading system

1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.

2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.

3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.

4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals should be closed manually.

5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.

6) If two key levels are too close to each other (about 5–15 pips), then this is a support or resistance area.

How to read charts:

Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.

Red lines are channels or trend lines that display the current trend and show which direction is better to trade.

MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.

Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, 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.

Beginning traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.