FX.co ★ Trading plan for GBP/USD on August 16. Simple tips for beginners

Analyzing Tuesday's trades:

GBP/USD on 30M chart

On Tuesday, GBP/USD went through low volatility and messy movements. In general, the pound's movements were the same as those of the EUR/USD pair. The market reaction to the reports was also similar, except that the European ZEW indexes were not related to the British pound. However, it had its own data in the form of reports on unemployment, wages, and unemployment benefit claims. In our opinion, the pound should have fallen not risen in response to the British reports in the first half of the day, as two of the three reports turned out to be worse than forecasts. Unemployment increased, and the number of benefit claims was higher than expected. However, the wage report, which showed a sharp growth rate, tipped the balance.

As a result, the pair continued to correct after rebounding from the 1.2620 level, but before that, it was in a sideways channel for two weeks and simply returned to it. We don't expect the pound to start an uptrend.

GBP/USD on 5M chart

Several trading signals were formed on the 5-minute chart. The pair spent the entire day between the levels of 1.2688 and 1.2748, regularly rebounding from them. Volatility was 78 points. There is no point in analyzing each individual signal, as they were almost identical. Beginners had to decide for themselves whether they wanted to scalp between levels, the distance between which is 30-35 points. As we can see, the price regularly bounced from these levels, which means that none of them was unnecessary. We witnessed such a movement on Tuesday. Since most of the signals turned out to be right, it was possible to earn a decent amount, but we do not see much sense in opening 10 trades with a potential profit of 10 points each.

Trading tips on Wednesday:

On the 30-minute chart, the GBP/USD pair may be in a flat position. However, we insist that the pound fall, as we still believe it is overbought and unreasonably expensive. Not all of this week's reports may support the dollar, so we may see messy movements in the sideways channel. The key levels on the 5M chart are 1.2499, 1.2538, 1.2605-1.2620, 1.2653, 1.2688, 1.2715, 1.2748, 1.2787-1.2791, 1.2848-1.2860, 1.2913. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Wednesday, the UK is set to release an inflation report, and this is the main item for the day. If it turns out that inflation is rising or falling more slowly than expected, the pound may jump.

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.