FX.co ★ Trading plan for GBP/USD on March 12. Simple tips for beginners

Analyzing Monday's trades:

GBP/USD on 1H chart

GBP/USD also experienced a small downward correction on Monday. This was enough for the pair to leave the descending channel. Now we have a clear sell signal, but we would like to remind you that one of the most important reports will be released today – the US inflation report. The logic is simple: if inflation turns out to be higher than expected, this should support the dollar. Especially considering the fact that the greenback has been unreasonably falling for almost an entire month. If inflation is lower than expected, the dollar may fall further. Take note that the bullish bias persists, and market participants may interpret the macroeconomic background as they please. However, we still have certain reasons to expect that the overbought pound would fall once again.

On Monday, there were no interesting events. The pair's decline was purely technical and corrective.

GBP/USD on 5M chart

Two sell signals were formed on the 5-minute timeframe. The pair bounced twice from the area of 1.2848-1.2860. In the first case, the pair did not fall by 20 pips, so by the time the second signal was formed, beginners could simply stay in short positions. Eventually, the price started to fall, and by the end of the day, it dropped near the area of 1.2787-1.2791, where it remained. Thus, short positions should have been manually closed in the evening. The profit amounted to about 30 pips.

Trading tips on Tuesday:

On the hourly chart, GBP/USD intends to resume the upward trend, although there are no fundamental and macroeconomic grounds for it. The pair has consolidated below the ascending channel, but its succeeding movements will depend on the US inflation data. The dollar is excessively oversold, while the pound is overbought.

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 Tuesday, the UK will release several reports. The unemployment rate and claims for unemployment benefits can provoke a market reaction, but only in case of a significant deviation from the forecast values. The wage report is not crucial, but it does have a direct impact on inflation, as representatives of all three central banks have repeatedly stated. Therefore, you should pay attention to it as well. The main item on today's agenda is the US inflation data.

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.