FX.co ★ Trading plan for GBP/USD on June 27. Simple tips for beginners

Analyzing Monday's trades:

GBP/USD on 30M chart

The GBP/USD pair also traded with low volatility and in a flat range on Monday. The price movement for the day ranged only 62 pips, which is very low for the British pound. The price has been moving precisely along the 1.2698 level for two consecutive days, indicating a flat market. Within this flat range, the ascending trendline was broken. Take note that signals formed within a flat range are not strong and are more likely to be false. Therefore, I don't think the uptrend has ended.

There were no important fundamental events in either the UK or the US. The British pound remains inclined to rise and is at a very high level. We have not seen normal corrections in the long term over the past 9-10 months. The market continues to buy the pound. In addition, the Bank of England surprised us with a 0.5% rate hike, which may provide further reason for new purchases.

GBP/USD on 5M chart

The situation on the 5-minute chart was not favorable. The price bounced off the 1.2698 level twice but failed to move more than 15 pips in the right direction both times. Therefore, it was not possible to set the stop loss at breakeven. On the other hand, it was not necessary because the pair also failed to consolidate below the 1.2698 level, indicating a lack of sell signals. Beginners could have even made a small profit on this trade by manually closing it closer to the evening.

Trading tips on Tuesday:

As seen on the 30M chart, the pair has been moving downward for seven consecutive trading days. During those days, it covered a distance of 160 pips. This is all you need to know about the pound's desire to correct. We still believe that the pound is heavily overbought, but the market is not ready to stop buying yet. The key levels on the 5M chart are 1.2457, 1.2499, 1.2538, 1.2597, 1.2629, 1.2690, 1.2772, 1.2860, 1.2913, and 1.2981. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. There are no significant events lined up in the UK. In the US, two reports may draw market interest: durable goods orders and new home sales. The pound is essentially in a flat range, but there is still a possibility that these reports may stir some market reaction.

Basic trading rules:

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.

Beginners 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.