Trading plan for GBP/USD on July 18. Analysis and simple tips for beginners
July 17, 2023 9:27 pm
Analysis of Monday trades:
GBP/USD 30M chart
The GBP/USD pair continued to trade mostly flat on Monday. Similar to Friday, there was a minimal downward correction, but the volatility during the day was only 57 pips, which is very low for the British currency. The pair consolidated below the upward trend line, which theoretically should indicate a shift to a downward trend. However, we should remember that such signals formed in a flat market are highly likely to be false. Instead, it is more significant to note that the pair is unable to correct its movement following a strong rally last week. The pound remains overbought, yet there is no correction taking place. The market continues to move only in one direction, which is long positions. There was no macroeconomic or fundamental backdrop on Monday.
GBP/USD 5M chart
On the 5-minute timeframe, only one trading signal was formed on Monday. During the mid-European trading session, the pair rebounded three times from the level of 1.3107. Each of these signals duplicated one another. Therefore, novice traders could have opened a short position, but the nearest target level of 1.3043 was not reached. Hence, the trade should have been manually closed by the evening. The profit amounted to approximately 20 pips, which is quite good under flat market conditions.
Trading strategy for Tuesday:
On the 30-minute timeframe, the GBP/USD pair maintains an upward trend despite surpassing the trend line. Therefore, the upward trend can resume at any moment, even though it lacks any foundations. At the same time, strong correction can occur at any time as the pair is overbought. On the 5-minute timeframe tomorrow, the key levels can be found at 1.2779-1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, 1.3043, 1.3107, 1.3145, 1.3210, 1.3241, and 1.3272. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. There are no significant events scheduled in the UK for Tuesday, but the US will release reports on retail sales and industrial production, which may slightly stir the market. However, volatility may still remain low.
Basic rules 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, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, 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 from 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 Monday trades:
GBP/USD 30M chart
The GBP/USD pair continued to trade mostly flat on Monday. Similar to Friday, there was a minimal downward correction, but the volatility during the day was only 57 pips, which is very low for the British currency. The pair consolidated below the upward trend line, which theoretically should indicate a shift to a downward trend. However, we should remember that such signals formed in a flat market are highly likely to be false. Instead, it is more significant to note that the pair is unable to correct its movement following a strong rally last week. The pound remains overbought, yet there is no correction taking place. The market continues to move only in one direction, which is long positions. There was no macroeconomic or fundamental backdrop on Monday.
GBP/USD 5M chart
On the 5-minute timeframe, only one trading signal was formed on Monday. During the mid-European trading session, the pair rebounded three times from the level of 1.3107. Each of these signals duplicated one another. Therefore, novice traders could have opened a short position, but the nearest target level of 1.3043 was not reached. Hence, the trade should have been manually closed by the evening. The profit amounted to approximately 20 pips, which is quite good under flat market conditions.
Trading strategy for Tuesday:
On the 30-minute timeframe, the GBP/USD pair maintains an upward trend despite surpassing the trend line. Therefore, the upward trend can resume at any moment, even though it lacks any foundations. At the same time, strong correction can occur at any time as the pair is overbought. On the 5-minute timeframe tomorrow, the key levels can be found at 1.2779-1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, 1.3043, 1.3107, 1.3145, 1.3210, 1.3241, and 1.3272. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. There are no significant events scheduled in the UK for Tuesday, but the US will release reports on retail sales and industrial production, which may slightly stir the market. However, volatility may still remain low.
Basic rules 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, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, 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 from 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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