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Trading plan for GBP/USD on November 8. Simple tips for beginners
November 8, 2023 3:23 amVideo
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Analyzing Tuesday’s trades:
GBP/USD on 30M chart
GBP/USD continued its downward movement on Tuesday, which had started the previous day. The pound did not have any fundamental or macroeconomic reason to fall. There were no significant reports released in either the U.S. or the UK. However, it’s important to remember that strong movements are often followed by corrective phases. At the moment, the pair has undergone a significant correction downwards compared to the Friday movement. Still, the issue is that the entire upward movement of the past month is essentially a correction itself. Therefore, we expect the downtrend to resume in the medium-term perspective. In this regard, the level of 1.2270 can be a reference point for Wednesday. If the pair breaches this level, the downward movement will remain intact, which would be entirely reasonable.
GBP/USD on 5M chart
On the 5-minute chart, only one trading signal was generated, and it occurred towards the end of the day. The price reached the 1.2270 level in the second half of the U.S. session, from which it rebounded. However, it made little sense to execute this signal, as it formed too late. In general, the pair was in a downtrend throughout the day, but it wasn’t a crucial decline; it was a correction.
Trading tips on Wednesday:
On the 30-minute chart, we had been anticipating a proper upward correction cycle for the GBP/USD pair for quite some time, and it has finally materialized. However, at this point, it seems that this correction is already coming to an end. If that’s the case, we expect the downtrend to resume. Now everything depends on the level of 1.2270, which the pair has yet to breach. The key levels on the 5M chart are 1.1992-1.2010, 1.2052, 1.2089-1.2107, 1.2164-1.2179, 1.2235, 1.2270, 1.2310, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, and 1.2688. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Wednesday, there are no important events scheduled in the U.K. For the U.S., we can highlight Federal Reserve Chairman Jerome Powell’s speech. His speech is always important or, at the very least, interesting. Several days have passed since his last speech following the Fed meeting, but these days have seen important reports on labor market data, unemployment, and business activity in the service sector. Therefore, Powell may comment on the new data in the context of monetary policy.
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 material has been provided by InstaForex Company – www.instaforex.com
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