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Trading plan for GBP/USD on May 16. Simple tips for beginners
May 15, 2023 9:23 pmVideo
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Analysis of Monday trades
GBP/USD 30M chart
On Monday, the GBP/USD pair also attempted to initiate a corrective movement, but unlike the euro, it performed significantly better. During the day, the British pound rose nearly 100 pips, although there was no apparent reason for this, apart from technical factors. There were no fundamental or macroeconomic events in the UK throughout the day, and Federal Reserve representatives’ speeches would have had an equal impact on both major pairs. Since the European currency did not react to these events, then the pound should not have either. Consequently, we witnessed a purely technical correction, and quite a strong one. The thought of an unfounded rise in the British currency once again comes to mind.
By the end of the day, the pair consolidated above the descending trend line. However, the downward trend may persist if a decline resumes in the near future. The trend line might just need to be readjusted. Moreover, there will be quite a few macroeconomic events tomorrow that could trigger a market reaction.
GBP/USD 5M chart
On the 5-minute timeframe, there were virtually no trading signals on Monday, despite the fairly strong and unilateral movement. Only during the American trading session the price approached the 1.2507-1.2520 area and even managed to break through it over several hours, but the signal formed too late for intraday trading. Unfortunately, in the morning, the pair fell just 10 pips short of reaching the strong level of 1.2434. Therefore, novice traders should not have entered the market today.
Trading strategy for Tuesday:
On the 30-minute timeframe, the GBP/USD pair has finally started to decline, but it’s difficult to anticipate how long this will last. The trend line is no longer formally relevant, but the downward trend could still persist if the decline resumes in the near future. We still believe that the pound should continue to decline, and we will consider any new rise, aside from a technical correction, as unfounded. On the 5-minute timeframe, the key levels tomorrow are 1.2245-1.2260, 1.2351-1.2367, 1.2434, 1.2507-1.2520, 1.2597-1.2616, 1.2659, and 1.2697. If the price moves in the expected direction by 20 pips, you can set a breakeven stop loss. On Tuesday, the UK has scheduled publications of unemployment levels, unemployment claims, and the wages data. These are medium-importance reports that may trigger a reaction only if their values significantly deviate from forecasts. In the US, there are also not the most important reports on industrial production and retail sales, as well as another round of speeches by Federal Reserve representatives.
Key rules of the trading system:
How to read charts:
Support and resistance price levels are targets when opening long or short positions. Take Profit levels can be placed around them.
Red lines represent channels or trend lines that display the current trend and indicate the preferred direction for trading.
MACD indicator (14,22,3) – histogram and signal line – is an auxiliary indicator that can also be used as a source of signals.
Important speeches and reports (always included in the news calendar) can significantly influence the movement of the currency pair. Therefore, one should trade very cautiously during their release or exit the market to avoid sharp price reversals against the previous movement.
Beginning traders should remember that not every trade can be profitable. Developing a clear strategy and practicing sound money management are the key to sustainable trading success.
The material has been provided by InstaForex Company – www.instaforex.com
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