Trading plan for GBP/USD on June 22. Simple tips for beginners
June 22, 2023 4:23 am
Analyzing Wednesday’s trades:
GBP/USD on 30M chart
GBP/USD initially fell, then rose on Wednesday, and there are questions about how justified these movements are. There were two important events on Wednesday: the UK inflation report and Federal Reserve Chairman Jerome Powell’s speech to the US Congress. The British pound has been experiencing unwarranted growth for several months now, clearly driven by momentum. In other words, the market uses any reason to buy the pound rather than sell it. However, when the inflation report was released this morning, which indicated no slowdown in the main indicator and an increase in core inflation, the British pound inexplicably fell, even though such figures mean that the Bank of England may raise interest rates even further! This is exactly what the market believes right now, constantly buying the pound.
On the other hand, it is difficult to consider Powell’s speech as dovish given that the US dollar weakened in the second half of the day. The Fed chair stated that monetary tightening may continue in the second half of the year, which should have theoretically triggered a dollar rally, not its decline! Overall, the uptrend persists.
GBP/USD on 5M chart
The trading signals were quite complicated. There were two signals in the morning that should have been ignored. Initially, the pair stayed above 1.2772, and then dropped below it. Both of these signals were formed during the release of the UK inflation report, making it risky to act as the reaction was unpredictable. Therefore, the first signals to consider were rebounds from 1.2698. In the first case, the long position closed at breakeven with a stop loss, and in the second case, the price reached the target level of 1.2772 and surpassed it. Therefore, the long position could have been closed with a profit of at least 50-60 pips.
Trading tips on Thursday:
As seen on the 30M chart, the pair continues its uptrend in the short term. There is no need to talk about any logic in the movements now as the pound is still heavily overbought and continues to rise for no reason. The key levels on the 5M chart are 1.2457, 1.2499, 1.2538, 1.2597, 1.2629, 1.2698, 1.2772, 1.2860, 1.2913, 1.2981. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. On Thursday, the BoE meeting’s results will be announced in the UK, and the voting breakdown on the key interest rate will be of importance. In the US, there will be Powell’s second speech and a secondary report on unemployment claims.
Basic trading rules:
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 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.
Beginners 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
Analyzing Wednesday’s trades:
GBP/USD on 30M chart
GBP/USD initially fell, then rose on Wednesday, and there are questions about how justified these movements are. There were two important events on Wednesday: the UK inflation report and Federal Reserve Chairman Jerome Powell’s speech to the US Congress. The British pound has been experiencing unwarranted growth for several months now, clearly driven by momentum. In other words, the market uses any reason to buy the pound rather than sell it. However, when the inflation report was released this morning, which indicated no slowdown in the main indicator and an increase in core inflation, the British pound inexplicably fell, even though such figures mean that the Bank of England may raise interest rates even further! This is exactly what the market believes right now, constantly buying the pound.
On the other hand, it is difficult to consider Powell’s speech as dovish given that the US dollar weakened in the second half of the day. The Fed chair stated that monetary tightening may continue in the second half of the year, which should have theoretically triggered a dollar rally, not its decline! Overall, the uptrend persists.
GBP/USD on 5M chart
The trading signals were quite complicated. There were two signals in the morning that should have been ignored. Initially, the pair stayed above 1.2772, and then dropped below it. Both of these signals were formed during the release of the UK inflation report, making it risky to act as the reaction was unpredictable. Therefore, the first signals to consider were rebounds from 1.2698. In the first case, the long position closed at breakeven with a stop loss, and in the second case, the price reached the target level of 1.2772 and surpassed it. Therefore, the long position could have been closed with a profit of at least 50-60 pips.
Trading tips on Thursday:
As seen on the 30M chart, the pair continues its uptrend in the short term. There is no need to talk about any logic in the movements now as the pound is still heavily overbought and continues to rise for no reason. The key levels on the 5M chart are 1.2457, 1.2499, 1.2538, 1.2597, 1.2629, 1.2698, 1.2772, 1.2860, 1.2913, 1.2981. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. On Thursday, the BoE meeting’s results will be announced in the UK, and the voting breakdown on the key interest rate will be of importance. In the US, there will be Powell’s second speech and a secondary report on unemployment claims.
Basic trading rules:
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 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.
Beginners 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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