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

Analyzing Wednesday's trades:

GBP/USD on 30M chart

The GBP/USD pair once again fell towards the level of 1.2502, which the price has tried to overcome three times in the last four days. Currently, it is clear that the market wants to continue the downward movement, but the decline has been gradual, despite all the reasons for it. The ascending trendline is still relevant, and over the last six days, the pair has been trading within the sideways channel of 1.2502-1.2611. Therefore, we consider the sideways channel as the starting point for analysis. As long as the price does not leave it, the flat phase will persist regardless of the fundamental and macroeconomic background.

The price could move 100 pips away from the current value. However, a 100-point move to the downside would mean that the market is pushing for a new downtrend (which we anticipate), while a 100-point move to the upside signifies the preservation of the flat trend. In any case, the flat trend will not last forever, and in the medium term, we expect the pound to fall further. The market clearly responded to the UK reports on Wednesday, which all turned out to be weaker than expected. Therefore, the decline was entirely logical and predictable.

GBP/USD on 5M chart

On the 5-minute chart, only one buy signal was generated with a slight error. We decided to reevaluate the 1.2544 level on the chart, but it did not play a role in forming a signal. Therefore, beginners could only capitalize on a bounce from the level of 1.2502, after which the price moved up by no more than 15 pips. At this point, it would be better to close this trade or set a stop-loss on it, as the price could make a significant move in either direction.

Trading tips on Thursday:

On the hourly chart, the GBP/USD pair continues its negative trading, which is both weak and uncertain. We believe that the pound should continue to fall as it simply has no fundamental and macroeconomic reason to justify a rally.

We recommend focusing on the sideways channel of 1.2502-1.2605 if the price does not leave it after the Federal Reserve meeting. Rebounds or breakthroughs from these levels will make it possible for us to open corresponding deals. We expect volatility to gradually increase during the day.

The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2544, 1.2605-1.2611, 1.2688, 1.2723, 1.2787-1.2791, 1.2848-1.2860. On Thursday, the Bank of England will announce the results of its last meeting of the year, along with the European Central Bank. Therefore, we expect high volatility, but it does not necessarily mean that the pair will leave the sideways channel. Neither central bank is ready to change the parameters of monetary policy, so the market reaction may be strong but without a clear advantage for the dollar or the pound.

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.