FX.co ★ Trading plan for GBP/USD on February 13. Simple tips for beginners

Analyzing Monday's trades:

GBP/USD on 1H chart

GBP/USD did not show any notable movements on Monday. Volatility amounted to a mere 48 pips. The price has been hovering around the level of 1.2611 for four days, seemingly teasing traders. The British pound spent one and a half months in a range between the levels of 1.2611 and 1.2787. During this time, it bounced off the level of 1.2611 about six or seven times. Finally, there was a break below this level; the price stayed below it for just two days, returned to the area above it, and now it is struggling to overcome it. Frankly, it looks like a paradox.

Nevertheless, it is what it is. At this point, we can expect the pound to rise to the level of 1.2787, which would be completely illogical and would require support from the fundamental and macroeconomic background, or the pair could break below the level of 1.2611, which would open up new prospects for the downward movement.

GBP/USD on 5M chart

The movements on the 5-minute timeframe left much to be desired. The price dropped to the 1.2605-1.2611 range and bounced back during the US session, making it possible for novice traders to open long positions. The trader will decide how long he/she intends to hold on to this position. We consider it reasonable to set a Stop-Loss to breakeven and hope that the pair would rise towards the level of 1.2688.

Trading tips on Tuesday:

On the hourly chart, GBP/USD left the sideways channel of 1.2611-1.2787 but has already returned to it. Last week's fundamental and macroeconomic background were very weak, which led to corresponding movements in the pair. A new week has started, and the situation has not changed at all. The British pound has a good chance of rising, but there will be important events this week that could trigger a decline. For instance, Andrew Bailey's speech.

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, 1.2725, 1.2787-1.2791, 1.2848-1.2860, 1.2913, 1.2981-1.2993. On Tuesday, the UK will release reports on unemployment and wages. The US inflation report for January will be a key focus, but significant values in the British reports could also provoke a good market reaction.

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.