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FX.co ★ Trading plan for GBP/USD on June 3. Simple tips for beginners

Trading plan for GBP/USD on June 3. Simple tips for beginners

Analyzing Friday's trades:

GBP/USD on 1H chart

Trading plan for GBP/USD on June 3. Simple tips for beginners

On Friday, the GBP/USD pair also edged higher, and overall, volatility was about 70 pips. Traders might be accustomed to such volatility, but take note that 70 pips is relatively low. There were no significant events in the UK throughout the week, and as usual the US macro data turned out to be weak or were perceived by the market as such, which exerted pressure on the US dollar on Thursday and Friday. Therefore, although the price consolidated below the trend line, the upward trend persists. This is the second instance where the pair has breached the trend line, but the British pound did not even fall. This is another sign that the market simply refuses to sell the pound, and it is not even about the news or reports. From Monday to Wednesday, there were no significant reports, and the pair could have corrected during this time, but the last decline was so weak that the price did not even break the latest local low.

GBP/USD on 5M chart

Trading plan for GBP/USD on June 3. Simple tips for beginners

Four trading signals were formed on the 5-minute timeframe. During the European session, the pair was absolutely flat, and it only managed to show a significant rise at the beginning of the US session (thanks to the US PCE report), but it quickly ended. Thus, all four signals turned out to be false signals, and we did not see any movements that could have been executed in an effective manner.

Trading tips on Monday:

On the hourly chart, the GBP/USD pair has great prospects for forming a downward trend, but the bullish correction remains intact. The fundamental backdrop continues to support the dollar much more than the British currency, but we have noticed that the pound rises quite often. The market interprets most of the news in favor of the British currency.

Logically speaking, we can expect the pound to fall on Monday, but considering the fact that the market doesn't need any reason to buy, the pound can still rise. The pair could also exhibit a flat movement.

The key levels on the 5M chart are 1.2372-1.2387, 1.2457, 1.2502, 1.2541-1.2547, 1.2605-1.2633, 1.2684, 1.2725, 1.2791-1.2798, 1.2848-1.2860. Today, the final business activity indices in the manufacturing sectors for May will be published in the UK and the US, but you should focus on the US ISM index. The pair may show substantial movements during the US trading session.

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.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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