FX.co ★ Trading plan for GBP/USD on September 25. Simple tips for beginners

Analyzing Friday's trades:

GBP/USD on 30M chart

GBPUSD continued a bearish trend on Friday. While the euro occasionally tries to correct higher or at least trades flat, the British pound has been falling almost every day. So how can we explain this behavior? Well, there's no need for an explanation! The fact is the pound has been in a steady upward movement for about a year, and for at least 6 months, it has been rising without any distinct reason. So, what we're witnessing now is merely a correction of that illogical growth. If earlier, the market did not need any specific reason to buy, now it doesn't need any reason to sell either.

On Friday, UK macro data came out slightly weaker than required or expected. While business activity in the United States was at least somewhere around the 50 level, in the UK, it came out lower. Therefore, another consecutive decline from the pound should not raise any questions.

GBP/USD on 5M chart

Three trading signals were formed on the 5-minute chart, but the nature of the movement left much to be desired, and volatility was only 64 pips. The first sell signal, which occurred when the pair breached the level of 1.2245, turned out to be false. The next two buy signals (which duplicated each other) near the same level were also false, but at least you could set a stop loss at breakeven. Take note that when a pair goes through low volatility, almost all signals turn out to be false because there simply isn't enough momentum to reach the target level. Therefore, beginners probably did not make any profit on Friday.

Trading tips on Monday:

On the 30-minute chart, GBP/USD has experienced several challenging days, with the downtrend still in place and the fundamental backdrop getting worse for the British currency. Therefore, it may enter a bullish correction in the near future (simply because there is a technical need for it), but in the long run, we expect the pound to continue falling. The key levels on the 5M chart are 1.2143, 1.2171-1.2179, 1.2245, 1.2307, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, 1.2688. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Monday, there are no important events or reports lined up in either the United Kingdom or the United States. Most likely, we should brace ourselves for another low-volatility day.

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.