FX.co ★ Trading plan for GBP/USD on September 6. Simple tips for beginners

Analyzing Tuesday's trades:

GBP/USD on 30M chart

At the end of Tuesday, GBP/USD also showed decent volatility and somewhat erratic movements. While it's possible to explain the euro's decline from a fundamental perspective, it is quite difficult to assess the pound's fall. We have repeatedly mentioned that we expect a downward movement in the medium term, but on a day-to-day basis, there is a desire to find specific reasons for the movement. This isn't always possible; the market isn't obligated to move a pair only when there are reasons, reports, and events.

The descending trendline remains in effect, but it's very weak. There were no economic reports or fundamental events in the US and the UK. The movements in the second half of the day were somewhat surprising. The British pound is still falling, but it's falling very slowly, offering maximum resistance.

GBP/USD on 5M chart

The pair formed good trading signals on the 5-minute chart. Early in the European session, the price settled below the 1.2605-1.2620 area, so beginners could open short positions. Then the price dropped to the level of 1.2544, surpassed it, but almost immediately returned to the area above it, forming a buy signal. Profit from shorts was about 40 pips. The signal near the level of 1.2544 should have also been used to open longs. Subsequently, two more buy signals formed around the same level. In the second case, the price went up 20 pips, so a stop-loss should have been set at breakeven. In the third case, the price also moved up more than 20 pips, which traders could have taken as profit, so the trade should have been manually closed.

Trading tips on Wednesday:

On the 30-minute chart, the GBP/USD pair ended a round of bullish correction and finally resumed its downward movement. The movements are quite erratic, even after the pair fell on Tuesday, we can't be certain that it will continue to fall. Therefore, you should be cautious when you enter a position. The key levels on the 5M chart are 1.2457, 1.2488, 1.2544, 1.2605-1.2620, 1.2653, 1.2688, 1.2748, 1.2787-1.2791, 1.2848-1.2860. 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 will release its Construction PMI, and in the US, we can expect two versions of the Services PMIs. You should focus on the ISM index.

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.