Analysis of Tuesday's Trades
1H Chart of GBP/USD
The GBP/USD pair mainly traded sideways on Tuesday, but early Wednesday morning it surged upward. On the 4-hour timeframe, it's clear that the price is still within the horizontal channel of 1.3203–1.3440 and is currently approaching its upper boundary. However, the sharp rise of the British pound—which in essence reflects yet another drop in the U.S. dollar—suggests a potential resumption of the uptrend that began when Trump took office in the U.S. Over the past month, the dollar has only managed a modest correction, despite having plenty of reasons for a more significant rally. The U.S. and China agreed to cut tariffs by 115%, tariffs on 74 other countries were reduced to 10% for three months, the Federal Reserve returned to a hawkish stance, and the European Central Bank and Bank of England cut key rates. What more does the market need to start buying the dollar? Apparently, under current conditions, the fact that Trump is president is a strong enough reason for investors to buy any currency but the dollar.
5M Chart of GBP/USD
On Tuesday, several trading signals were generated on the 5-minute timeframe, but they were quite weak as the price remained within a range. First, the price consolidated above the 1.3365 level but moved only 15 pips in the desired direction. Then it consolidated below 1.3365 and managed to move only 20 pips. As a result, both signals can be considered false, though the second trade avoided losses.
Trading Strategy for Wednesday:
In the hourly timeframe, the GBP/USD pair continues to react to Donald Trump and remains highly skeptical of his policies. It's worth remembering that even the signing of a trade agreement between the U.S. and the U.K. should favor the dollar, not the pound—since it was the dollar that previously fell on every news item related to tariffs and sanctions. Now, the dollar should be recovering on every piece of news about trade de-escalation, and there have been plenty of those recently. However, the market still doesn't seem to trust the dollar and shows no willingness to buy it.
On Wednesday, the GBP/USD pair will again likely trade based on technical factors. There's little doubt that the market will look for any excuse to sell the dollar or wait for new headlines. Day after day, the situation remains unchanged.
On the 5-minute chart, trading is currently possible using the following levels: 1.2848-1.2860, 1.2913, 1.2980-1.2993, 1.3043, 1.3102-1.3107, 1.3203-1.3211, 1.3259, 1.3329, 1.3365, 1.3421-1.3440, 1.3488, 1.3537, 1.3580-1.3598. No significant events are scheduled in either the U.K. or the U.S. on Wednesday, so the market will likely remain flat or continue selling off the dollar without any specific reason.
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.
