Analysis of Friday's deals: 30M chart of the GBP/USD pair
The GBP/USD pair continued its upward correction on Friday and last week as a whole. Since the price initially went far below the descending channel, the current correction has not yet led to the quotes settling above this channel. Therefore, the downward trend continues, and the pound managed to go below the channel again by the end of the week. Therefore, we stick with our opinion: the pound will continue to fall against the dollar in the medium term. On Friday, in addition to Federal Reserve Chairman Jerome Powell's speech, there were releases of reports on personal income and expenses of the American population. Both indicators turned out to be much worse than forecasts and provoked a fall of the dollar by 60 points (even before the speech at Jackson Hole). In fact, reports on personal income and expenses rarely cause a strong market reaction, but this time the market considered that it was necessary to work out these data, although the deviations from the forecast values were not so large: personal income rose by 0.2% with forecast 0.6%, and personal expenses - by 0.1% with the forecast 0.4%. One way or another, the British currency's growth did not last long, because Powell's speech began in an hour and a half, after which the pair collapsed. As a result, the pound failed to even really consolidate above the level of 1.1863, which was the formal upper boundary of the horizontal channel. And once again it was not possible to correct normally.
5M chart of the GBP/USD pair
The pound/dollar pair showed good, volatile movements on the 5-minute timeframe. But with trading signals, everything was not as perfect as for the euro/dollar pair. The first signal was formed rather late. The price overcame the level of 1.1825, which was recognized as irrelevant by the end of the day and removed from the charts. This was followed by another buy signal, when the pair bounced off the 1.1825 level, but it did it extremely inaccurately. It's good that it was at this time that disappointing reports on income and expenses of Americans were published, which made it possible to assume at least a slight increase in the pair (that is, a fall in the dollar). Therefore, novice traders should have simply stayed long. As a result, the price reached the area of 1.1863-1.1877 and rebounded from it. It was at this time that Powell's speech began. We have already said that, technically, beginners could try to continue trading during such an important event, but it would be better not to do this. The sell signals were very strong and could have earned another 100 points, but we will not include the profit from these trades in the total calculation. As a result, without any special risks on Friday, it was possible to make a profit of 25 points.
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.
Trading analysis offered by Flex EA.
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