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

Analyzing Wednesday's trades:

GBP/USD on 30M chart

GBP/USD fell by several dozen pips at the end of Wednesday, which is a good thing. Recall that we expect both the euro and the pound to fall. However, in recent days, only the euro has fallen, while the pound has mostly stood still. Nevertheless, the ascending trendline has been broken, and the British pound has also risen for too long and it seems illogical for it to continue moving upwards. Therefore, we expect the pound to fall in the coming days, down to the level of 1.2488. Most likely, the overall downward movement will be much stronger.

The UK did not release any important reports, but Bank of England Governor Andrew Bailey delivered a speech, suggesting that there is no need for new rate hikes. Recall that the latest UK inflation report showed a slowdown to 4.6%, so the central bank doesn't need to tighten further. Bailey's rhetoric was expected, and the pound expectedly came under market pressure. If the US labor market reports on Friday do not turn out to be weak, then we can expect the pound to fall further.

GBP/USD on 5M chart

On the 5-minute chart, the price moved more sideways than downwards. A more or less noticeable decline began only later in the evening, during the US trading session. Throughout the day, the price bounced off the 1.2605-1.2620 area ten times, but these bounces were formed in a clear flat. Moreover, the pair was able to move in the intended direction only once. That is, according to all the sell signals, traders could only open one short position. This position even brought a profit, as there were no buy signals until now. The deal had to be closed manually, and the profit was about 25 pips.

Trading tips on Thursday:

On the hourly chart, the GBP/USD pair has finally started to fall, which is still too small to expect it to end. We believe that the pound may go down by at least another 100 pips. But this is in the near future. The pound could fall by 500-600 pips or more in several weeks and months. After all, the British currency has risen quite strongly, and such growth was quite illogical, so now it can fall with a clear conscience. The main thing is that the US reports do not spoil the whole picture.

The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2688, 1.2723, 1.2787-1.2791, 1.2848-1.2860. On Thursday, there is no interesting event lined up in the UK. From the US, only a routine report on jobless claims will be released. Therefore, we do not expect strong volatility, but the pound may continue to fall. Therefore, you should focus on selling.

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.