FX.co ★ Trading plan for GBP/USD on March 8. Simple tips for beginners

Analyzing Thursday's trades:

GBP/USD on 1H chart

GBP/USD continued to trade higher on Thursday, even though it had even fewer reasons to back its growth compared to the EUR/USD pair. The ascending channel on the hourly time frame clearly shows that the price has been rising without any significant pullbacks for a week now. On Thursday, it breached and surpassed the level of 1.2787, which has served as an upper boundary for the sideways channel for more than three months. Therefore, there's a good chance that we are finally seeing the end of the sideways movement on the 24-hour timeframe. If this is the case, the upward trend may likely resume in the medium-term.

We still do not see any fundamental or macroeconomic reasons to support the pound's growth. Nevertheless, the market continues to buy the British pound, and there is clearly no way to prevent it from doing so. The macroeconomic and fundamental background currently doesn't play a role here.

GBP/USD on 5M chart

An excellent buy signal was formed early in the morning on the 5-minute timeframe. The price bounced off the level of 1.2725, and by the middle of the U.S. session, it had risen to the 1.2787-1.2791 range and surpassed it. Therefore, beginners could open long positions in the morning and manually close them in the evening, as no sell signals were formed during the day. The profit for the trade was approximately 60 pips.

Trading tips on Friday:

On the hourly chart, GBP/USD intends to resume the upward trend, although there are no grounds for it. Therefore, the pound may rise in the near future, and the fundamental and macroeconomic backgrounds currently mean almost nothing. Since the price has surpassed the level of 1.2791, you may consider long positions while aiming for 1.2848. Volatility remains low, but there is enough of it for the pound to rise every day.

The key levels on the 5M chart are 1.2372-1.2387, 1.2457, 1.2502, 1.2544, 1.2605-1.2611, 1.2648, 1.2691, 1.2725, 1.2787-1.2791, 1.2848-1.2860, 1.2913, 1.2981-1.2993. On Thursday, there are no significant events lined up in the UK, while the U.S. will release important reports.

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.