Analysis of Friday's Trades
1H Chart of GBP/USD
The GBP/USD pair continued its upward movement on Friday. The move was extremely weak, with the day's total volatility amounting to only 43 pips. There were no macroeconomic events on Friday, so the market essentially took a day off — as we had warned in the morning. Despite the absence of macroeconomic data, news continued to arrive, primarily from the White House. For the first time in a long while, negotiations between Kyiv and Moscow will be held at the level of the two countries' leaders. For the first time in a long time, there is a real possibility of ending the military conflict in Ukraine. This factor will support all risk currencies in the near term. It should be noted that over the past six months, the dollar has seen a sharp decline in investor confidence, yet it continues to be regarded as a "stable and safe currency." Thus, if the conflict in Ukraine moves into a de-escalation phase, it will be beneficial for the euro and the pound. In addition, as early as September, the Federal Reserve may resume its monetary policy easing cycle, while Donald Trump continues to impose tariffs on every country he can find on the world map.
5M Chart of GBP/USD
On the 5-minute timeframe on Friday, one buy signal was formed despite very low volatility. At the start of the U.S. trading session, the price bounced from the 1.3413–1.3421 area and then managed to rise by 25 pips. Novice traders could easily earn these 25 pips. Agree that 25 pips of profit out of a total 40-pip move is a very positive result.
Trading Strategy for Monday:
On the hourly timeframe, the GBP/USD pair indicates that the downward trend has ended, and given the events of the past two weeks, we wouldn't bet a dime on the U.S. currency's growth. While the market is in no rush to open new dollar sell positions, the dollar nonetheless continues to decline steadily almost every day. The breakout above the descending channel has been completed, so the trend on the hourly timeframe has shifted upward.
On Monday, the GBP/USD pair may continue its upward movement. Therefore, any support level is potentially a point for a bounce and a resumption of movement to the upside. Since few news releases are expected, a bounce from the 1.3413–1.3421 area could trigger a new wave of upward movement. The bounce already occurred on Friday, so the growth may continue on Monday.
On the 5-minute timeframe, trading can now be carried out using the following levels: 1.3102–1.3107, 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. No important events or reports are scheduled in the United Kingdom or the U.S. for Monday, so volatility may again be low and movements weak today.
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.
