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22.05.2022 03:18 PM
How to trade GBP/USD on May 23? Simple tips for beginners.

Analysis of previous deals:

30M chart of the GBP/USD pair

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The GBP/USD pair was trading in absolute flat on Friday. The volatility of the day was only 60 points, which is very low for the pound. Despite the fact that the UK released macroeconomic reports, the market was frankly tired after a very active week, during which the pound was actively being bought. Traders were resting on Friday. However, the upward trend is still in place as beginners now have a trendline that has undergone minor changes during the week. Until the price settles below it, you can count on the pound to strengthen. Unfortunately, so far the pound has grown very weakly to talk about breaking the global downtrend. We want to say that everything for the pound may end with an increase to 1.2499. There are practically no factors that would support it in the long term. And the market also does not pay any attention to all of the Bank of England's efforts, which raised the key rate four times. In general, the pound, like the euro, can easily go back to falling and almost at any moment.

5M chart of the GBP/USD pair

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Only one trading signal was formed on the 5-minute timeframe on Friday. The pair rebounded from the level of 1.2499 at the beginning of the US trading session, forming a sell signal. After that, it went down about 30 points, but further down, to the level of 1.2405, it could not move. It also failed to settle above the level of 1.2499, so novice traders could close a short position at any time. 10-15 pips of profit could have been made on this trade. At the same time, it is clearly seen on the 5-minute timeframe that the pair has been moving sideways all day, so it was clearly not worth expecting a large number of profitable and strong signals. Now we should wait for a new trading week, during which the bulls will try to keep the pair in an upward direction, and the bears should show whether their retreat was temporary with the goal to go further, with stronger pressure on the positions of the pound/dollar pair.

How to trade on Monday:

The upward trend still persists on the 30-minute timeframe, but the price is already very close to the trend line, and this week it has already tried to settle below it several times, which led to the correction of the trend line itself. Thus, the position of the British pound is still very shaky, and a small number of fundamental and macroeconomic events next week is unlikely to support the demand for the pound. On the 5-minute TF on Monday, it is recommended to trade at the levels of 1.2337, 1.2371, 1.2405, 1.2499, 1.2596-1.2601. When the price passes after opening a deal in the right direction for 20 points, Stop Loss should be set to breakeven. Bank of England Governor Andrew Bailey is set to speak in the UK on Monday. Bailey rarely pleases the markets with important and loud statements. It will most likely be the same on Monday. However, perhaps this time he will report something about monetary policy. On the other hand, nothing interesting is planned in America, therefore, in general, we believe that the pound/dollar pair may continue to be in a weak, non-trend movement.

Basic rules of the trading system:

1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.

2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.

3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.

4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.

5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.

On the chart:

Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.

The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).

Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

Paolo Greco,
Analytical expert of InstaForex
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