FX.co ★ Trading plan for GBP/USD on August 29. Simple tips for beginners

Analyzing Monday's trades:

GBP/USD on 30M chart

At the end of Monday, the GBP/USD pair tried to start a corrective movement. However, volatility was so weak that the entire movement can be considered mere market noise. In other words, one should not draw any conclusions from a movement of 30-40 pips. This week, the focus now turns to the upcoming US labor market and unemployment data. There will be a considerable number of reports, and each one could provoke a market reaction, which is currently unpredictable, as are the report values themselves. Therefore, the dollar still has an excellent chance for growth, and in the medium term, we're still leaning towards its rise. However, a corrective phase is also possible since the pair has been falling for over a month, and US economic reports don't necessarily have to be strong.

GBP/USD on 5M chart

Only one trading signal was formed on the 5-minute chart. At the beginning of the European session, the price bounced off the 1.2605 level, and then it fell by 25 pips. Naturally, with a volatility of 40 pips, it couldn't reach the nearest target level, but the 25 pip move in the right direction allowed traders to set a Stop Loss at breakeven. No more signals by the end of the day, so traders could exit the trade at any desired point. Ideally, one could have made about 15 pips. In the worst case, a Stop Loss at breakeven was triggered.

Trading tips on Tuesday:

On the 30-minute chart, the GBP/USD pair broke out of the sideways channel and may now continue the downward movement. We're still leaning towards a further decline in the British pound, believing it's currently overbought and unjustifiably pricey. This week's macroeconomic backdrop will be quite strong, so the pound could move in either direction. The key levels on the 5M chart are 1.2372, 1.2457, 1.2488, 1.2543, 1.2605-1.2620, 1.2653, 1.2688, 1.2748, 1.2787-1.2791. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Tuesday, there's nothing particularly noteworthy slated in the UK. On the other hand, the JOLTS Job Openings report will be released in the US.

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.