Trading plan for GBP/USD on August 11: analysis and simple tips for beginners
August 10, 2023 9:23 pm
Analysis of Thursday trades:
GBP/USD 30M chart
By the end of Thursday, the GBP/USD pair showed impressive movements but remained within the sideways channel of 1.2688-1.2801. As we predicted yesterday, the volatility sharply increased. However, the US inflation report figures weren’t sufficient to push the pair out of the channel. Technically, it settled below the channel in the evening, but this positioning isn’t too deep. Still, the British pound has every chance of resuming its decline because it is overly overbought.
In addition to the inflation report, there was a release on unemployment benefit claims today. Its significance wasn’t particularly resonant, and the report isn’t among the most crucial ones. Thus, the slightly higher number of claims didn’t influence the trading course. In the latter half of the day, the US dollar recouped all its earlier losses, and this was a logical move.
GBP/USD 5M chart
On Thursday, numerous signals were formed on the 5-minute timeframe. Initially, the pair rebounded from the 1.2715 level, subsequently rising to the area of 1.2791-1.2801. It was advisable to close the buying position before this region was fully realized, prior to the release of US inflation data. The profit from this amounted to about 45 points. This was followed by tumultuous activity, and a new position should only have been opened upon a signal indicating the surpassing of the 1.2748 level, once it became clear that the report was favorable to the dollar. Ultimately, the pair fell to just below the 1.2688 level by day’s end, where profits from short positions could have been locked in. This would account for an additional profit of about 55 points.
Trading plan for Friday:
On the 30-minute timeframe, the GBP/USD pair has broken its short-term downtrend, but then moved to a consolidation phase. The pound might continue its correction, but it’s unlikely we’re looking at a strong new uptrend. The British pound’s decline is likely to resume, as we still believe it is overbought and unjustifiably expensive. For trading on the 5-minute timeframe tomorrow, the following levels can be considered: 1.2538, 1.2597-1.2605, 1.2653, 1.2688, 1.2715, 1.2748, 1.2791-1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, and 1.3043. After a price move of 20 points in the right direction post-trade opening, a stop loss can be set to break even. On Friday, the UK has scheduled releases for Q2 GDP and industrial production. In the US, secondary data on producer prices and consumer sentiment will be released. The UK statistics will influence the market only if there are significant deviations in the numbers.
The basic principles of a trading system:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
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 are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginning traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company – www.instaforex.com
Analysis of Thursday trades:
GBP/USD 30M chart
By the end of Thursday, the GBP/USD pair showed impressive movements but remained within the sideways channel of 1.2688-1.2801. As we predicted yesterday, the volatility sharply increased. However, the US inflation report figures weren’t sufficient to push the pair out of the channel. Technically, it settled below the channel in the evening, but this positioning isn’t too deep. Still, the British pound has every chance of resuming its decline because it is overly overbought.
In addition to the inflation report, there was a release on unemployment benefit claims today. Its significance wasn’t particularly resonant, and the report isn’t among the most crucial ones. Thus, the slightly higher number of claims didn’t influence the trading course. In the latter half of the day, the US dollar recouped all its earlier losses, and this was a logical move.
GBP/USD 5M chart
On Thursday, numerous signals were formed on the 5-minute timeframe. Initially, the pair rebounded from the 1.2715 level, subsequently rising to the area of 1.2791-1.2801. It was advisable to close the buying position before this region was fully realized, prior to the release of US inflation data. The profit from this amounted to about 45 points. This was followed by tumultuous activity, and a new position should only have been opened upon a signal indicating the surpassing of the 1.2748 level, once it became clear that the report was favorable to the dollar. Ultimately, the pair fell to just below the 1.2688 level by day’s end, where profits from short positions could have been locked in. This would account for an additional profit of about 55 points.
Trading plan for Friday:
On the 30-minute timeframe, the GBP/USD pair has broken its short-term downtrend, but then moved to a consolidation phase. The pound might continue its correction, but it’s unlikely we’re looking at a strong new uptrend. The British pound’s decline is likely to resume, as we still believe it is overbought and unjustifiably expensive. For trading on the 5-minute timeframe tomorrow, the following levels can be considered: 1.2538, 1.2597-1.2605, 1.2653, 1.2688, 1.2715, 1.2748, 1.2791-1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, and 1.3043. After a price move of 20 points in the right direction post-trade opening, a stop loss can be set to break even. On Friday, the UK has scheduled releases for Q2 GDP and industrial production. In the US, secondary data on producer prices and consumer sentiment will be released. The UK statistics will influence the market only if there are significant deviations in the numbers.
The basic principles of a trading system:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
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 are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginning traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company – www.instaforex.com
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