Trading plan for GBP/USD on October 25. Simple tips for beginners
October 25, 2023 4:24 am
Analyzing Tuesday’s trades:
GBP/USD on 30M chart
GBP/USD has drifted sharply lower on Tuesday, much like the EUR/USD pair. There were few reasons for this. There were almost none, to be precise. The UK reports were more neutral than negative, so they could not have triggered such a sharp decline. The unemployment rate fell, but the number of unemployment benefit claims exceeded forecasts. The Services PMI declined, while the Manufacturing PMI increased. US reports were released too late, as the pound started to fall much earlier than their release.
If, in the case of the euro, the second leg of the correction exceeded the maximum of the first leg, the situation is different for the pound. The price did not reach the previous local high, so the correction still looks incomplete. Of course, it can be very weak and small, but it’s better to orient ourselves based on the euro, where there’s a trendline and a convincing correction.
GBP/USD on 5M chart
On the 5-minute chart, several trading signals were generated. The first buy signal near the 1.2270 level turned out to be false and caused a loss of 20 pips. However, the very next signal near the same level turned out to be correct, as were the subsequent two signals. As a result, the short position offset the loss from the first trade and allowed for very good earnings because the pair moved lower for the rest of the day. The trade should have been closed below the 1.2164 level, and the profit was at least 100 pips.
Trading tips on Wednesday:
On the 30-minute chart, we were expecting a new leg of the upward correction, but it ended too soon. Of course, the pair can resume the downtrend right now, but it still seems incomplete. Therefore, the 1.2107 level may keep the pair from falling for the third time in the last five days. 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, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, 1.2688. 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 lined up in the UK. From the US, a secondary report on new home sales will be published, along with a speech by Federal Reserve Chair Jerome Powell, which is the main item on Wednesday’s agenda.
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, 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.
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
Analyzing Tuesday’s trades:
GBP/USD on 30M chart
GBP/USD has drifted sharply lower on Tuesday, much like the EUR/USD pair. There were few reasons for this. There were almost none, to be precise. The UK reports were more neutral than negative, so they could not have triggered such a sharp decline. The unemployment rate fell, but the number of unemployment benefit claims exceeded forecasts. The Services PMI declined, while the Manufacturing PMI increased. US reports were released too late, as the pound started to fall much earlier than their release.
If, in the case of the euro, the second leg of the correction exceeded the maximum of the first leg, the situation is different for the pound. The price did not reach the previous local high, so the correction still looks incomplete. Of course, it can be very weak and small, but it’s better to orient ourselves based on the euro, where there’s a trendline and a convincing correction.
GBP/USD on 5M chart
On the 5-minute chart, several trading signals were generated. The first buy signal near the 1.2270 level turned out to be false and caused a loss of 20 pips. However, the very next signal near the same level turned out to be correct, as were the subsequent two signals. As a result, the short position offset the loss from the first trade and allowed for very good earnings because the pair moved lower for the rest of the day. The trade should have been closed below the 1.2164 level, and the profit was at least 100 pips.
Trading tips on Wednesday:
On the 30-minute chart, we were expecting a new leg of the upward correction, but it ended too soon. Of course, the pair can resume the downtrend right now, but it still seems incomplete. Therefore, the 1.2107 level may keep the pair from falling for the third time in the last five days. 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, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, 1.2688. 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 lined up in the UK. From the US, a secondary report on new home sales will be published, along with a speech by Federal Reserve Chair Jerome Powell, which is the main item on Wednesday’s agenda.
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, 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.
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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