Trading plan for GBP/USD on October 10: analysis and simple tips for beginners
October 9, 2023 9:23 pm
Analysis of Monday trades:
GBP/USD 1H chart
Following the first trading day of the week, the GBP/USD pair retreated from Friday’s peaks, as anticipated, but then sought to resume the upward correction observed in recent days. It’s noteworthy that the British pound has been in decline for over two months, hence an upward movement is due. Although the price has not managed to breach its recent local maximum, it is moving in that direction, leading us to believe that reaching the 1.2307 level is almost guaranteed.
There were no macroeconomic publications or fundamental events today in either the UK or the USA. Volatility amounted to 80 points, which is not insubstantial, but the intraday movement of the pair was quite chaotic, as was the case with the Euro. We believe that technical analysis should currently take precedence for traders, as it is precisely what is sustaining the upward correction. After all, on Friday, the pair could have plummeted even further as the NonFarm Payrolls and unemployment reports implied a strong strengthening of the US dollar.
GBP/USD 5M Chart
On Monday, signals for the British pound were not particularly favorable. We adjusted the 1.2171 level to 1.2164 at the end of the day, but fortunately, the price did not manage to convincingly settle below the 1.2171-1.2179 area during the day, so no false buy signals were received. Ultimately, only one buy signal was formed, which eventually allowed novice traders to secure a decent profit, as the pair reached the 1.2235 level by the end of the day. The profit was about 40–45 points and at least offset the loss on the EUR/USD pair.
Trading ideas for Tuesday:
On the H1 time frame, the GBP/USD pair quickly began a new wave of ascending correction, which has been ongoing for four days. The upward movement may continue even without fundamental and macroeconomic bases, as the decline has lasted two months, which justifies a correction. We anticipate a resumption of the decline in the medium-term perspective in any case, as the pound has been rising for too long and for no good reason. A correction is more logical for now. On the 5-minute TF tomorrow, the key levels are 1.1992-1.2010, 1.2052, 1.2107, 1.2164-1.2179, 1.2235, 1.2307, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, and 1.2688. Upon the price moving 20 points in the correct direction after opening a trade, a break-even Stop Loss can be set. On Tuesday, no significant or even secondary macroeconomic events are scheduled in either the USA or the UK. Therefore, we expect low volatility and a continuation of the ascending correction in a calm mode.
Basic rules of a trading system:
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, post 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 trend line 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.
Beginning traders 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
Analysis of Monday trades:
GBP/USD 1H chart
Following the first trading day of the week, the GBP/USD pair retreated from Friday’s peaks, as anticipated, but then sought to resume the upward correction observed in recent days. It’s noteworthy that the British pound has been in decline for over two months, hence an upward movement is due. Although the price has not managed to breach its recent local maximum, it is moving in that direction, leading us to believe that reaching the 1.2307 level is almost guaranteed.
There were no macroeconomic publications or fundamental events today in either the UK or the USA. Volatility amounted to 80 points, which is not insubstantial, but the intraday movement of the pair was quite chaotic, as was the case with the Euro. We believe that technical analysis should currently take precedence for traders, as it is precisely what is sustaining the upward correction. After all, on Friday, the pair could have plummeted even further as the NonFarm Payrolls and unemployment reports implied a strong strengthening of the US dollar.
GBP/USD 5M Chart
On Monday, signals for the British pound were not particularly favorable. We adjusted the 1.2171 level to 1.2164 at the end of the day, but fortunately, the price did not manage to convincingly settle below the 1.2171-1.2179 area during the day, so no false buy signals were received. Ultimately, only one buy signal was formed, which eventually allowed novice traders to secure a decent profit, as the pair reached the 1.2235 level by the end of the day. The profit was about 40–45 points and at least offset the loss on the EUR/USD pair.
Trading ideas for Tuesday:
On the H1 time frame, the GBP/USD pair quickly began a new wave of ascending correction, which has been ongoing for four days. The upward movement may continue even without fundamental and macroeconomic bases, as the decline has lasted two months, which justifies a correction. We anticipate a resumption of the decline in the medium-term perspective in any case, as the pound has been rising for too long and for no good reason. A correction is more logical for now. On the 5-minute TF tomorrow, the key levels are 1.1992-1.2010, 1.2052, 1.2107, 1.2164-1.2179, 1.2235, 1.2307, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, and 1.2688. Upon the price moving 20 points in the correct direction after opening a trade, a break-even Stop Loss can be set. On Tuesday, no significant or even secondary macroeconomic events are scheduled in either the USA or the UK. Therefore, we expect low volatility and a continuation of the ascending correction in a calm mode.
Basic rules of a trading system:
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, post 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 trend line 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.
Beginning traders 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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