Analysis of Tuesday's Trades
1H Chart of GBP/USD
On Tuesday, the GBP/USD pair also continued its downward movement, although it ended fairly quickly. The macroeconomic background was weak yesterday, and there were no new comments from Donald Trump, so traders had to spend nearly the entire day trading in the context of the EU–US trade agreement, which caused a sharp drop in both the euro and the pound on Monday. As we can see, the market recovered relatively quickly and stopped acting irrationally. Let us recall that we fully support the downward correction on the daily timeframe and believe it can continue based on technical factors. At the same time, there were no significant new fundamental reasons for the dollar's rise on Monday. Yes, Trump did sign a trade agreement — one that benefits the US and only the US. However, the agreement does not eliminate the existence of tariffs, the continuation of the trade war, or Trump's desire to impose tariffs on the entire world.
5M Chart of GBP/USD
In the 5-minute timeframe on Tuesday, we observed only one thing — flat movement. Therefore, the trading signals matched the nature of this price action. The price crossed the 1.3329–1.3331 area four times without producing any meaningful movement. As such, novice traders could have executed the first two signals, though they did not result in profit. The second signal could have been closed at breakeven, as the price did climb 20 pips upward.
Trading Strategy for Wednesday:
In the hourly timeframe, the GBP/USD pair shows that the downward technical correction continues. The pound has been falling for two days straight without solid justification, broke below the ascending trendline, and on Monday received a genuine reason to continue its decline. Therefore, in the short term, the dollar may continue its recovery, and the potential scope of the correction is best determined using the daily timeframe.
On Wednesday, the GBP/USD pair may experience a slight rebound from the 1.3331 level. Further decline of the British pound is certainly possible, but the market has already priced in Ursula von der Leyen's failed trade deal — now the focus shifts to macroeconomic data and the FOMC meeting.
On the 5-minute timeframe, current levels for trading include: 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3413–1.3421, 1.3466, 1.3518–1.3532, 1.3574–1.3590, 1.3643–1.3652, 1.3682, 1.3763, 1.3814–1.3832.
For Wednesday, there are no important releases or events scheduled in the UK, while in the US, GDP and ADP reports will be published, along with the FOMC meeting results in the evening.
Core Trading System Rules:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- Stop Loss: Set a Stop Loss to breakeven after the price moves 20 pips in the desired direction.
Key Chart Elements:
Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.
Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.
MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.
Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.
Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.
