FX.co ★ Trading plan for GBP/USD on November 14. Simple tips for beginners

Analyzing Monday's trades:

GBP/USD on 30M chart

On Monday, GBP/USD traded slightly more actively and only in one direction – upward. We can't say that such market behavior was caused by a unique fundamental or macroeconomic background, but in the last week or two, the pound has been trading slightly differently than the euro. The single currency has been in a flat position for a week already. On the other hand, the pound is actually moving and, after a five-day decline, has started to rebound. We believe that this rebound will end soon, afterwards both pairs will move downward. We don't see any substantial reason for the pound to rise further. It has corrected quite significantly in the last month and a half, so it is ready to start a steady downward movement.

As before, due to the unusual movements of the pair, there is currently neither a trend line nor a channel. There are only levels. There was no macroeconomic and fundamental background on Monday, but traders will have something to pay attention to on Tuesday.

GBP/USD on 5M chart

On the 5-minute chart, a good amount of trading signals were generated. During the European and half of the US sessions, the price bounced off the level of 1.2235 five times. All these signals simply duplicated each other, so one long position would have been enough. In the end, the pound managed to reach the level of 1.2270, where longs could be closed. The profit on them was about 20 points, which is not bad.

Trading tips on Tuesday:

On the 30-minute chart, we had been anticipating a proper upward correction cycle for the GBP/USD pair for quite some time, and it has finally materialized. However, a week has passed since then, and at the moment, it seems that the corrective cycle has finally come to an end. In that case, the downtrend may resume. The pair has breached the level of 1.2270, so the pound can fall further. A bounce from it from below will also act as a signal for the downtrend. The key levels on the 5M chart are 1.1992-1.2010, 1.2052, 1.2089-1.2107, 1.2164-1.2179, 1.2235, 1.2270, 1.2310, 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 Tuesday, the UK will release data on wages and unemployment. The US will release a crucial inflation report. All three reports can have a significant impact on trading if their values do not fully coincide with the forecasts.

Basic trading rules:

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

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 represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.

The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.

Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.