Analysis of Friday's Trades

1H Chart of GBP/USD

The GBP/USD pair experienced a slight decline on Friday, reflecting a mixed macroeconomic backdrop for both the pound and the euro. The UK manufacturing PMI for February fell sharply to 46.4 points, while the services PMI rose to 51.1 points. This produced one positive report and one negative report. In the US, business activity indices also showed mixed outcomes, and the University of Michigan's consumer sentiment index came in lower than anticipated. Given these conditions, it would not have been surprising if the dollar had weakened on Friday. However, it actually strengthened instead. The day prior, on Thursday, the pair had seen significant gains despite a lack of macroeconomic drivers. This highlights to beginner traders that the current movements of the pair are not strongly influenced by macroeconomic or fundamental factors. The upward correction on the daily timeframe continues, which underscores this situation.

5M Chart of GBP/USD

On the 5-minute chart, a solid trading signal emerged near the 1.2680-1.2685 area on Friday. Although there was a slight margin of error in its formation, this shouldn't have deterred the opening of a sell trade. The price continued to decline throughout the day, allowing for the closure of the short position by the evening, yielding a profit of approximately 30 pips.

Trading Strategy for Monday:

In the hourly timeframe, GBP/USD may start a short-term downtrend, but all movements in recent weeks are part of a correction in the daily timeframe. In the medium term, we still expect the pound to decline toward 1.1800, which is the only logical outcome. Therefore, it is just a matter of waiting for the upward correction on the daily timeframe to end.

On Monday, GBP/USD may start a new downward move, as the pound has risen significantly over the past few weeks. However, movements are currently erratic and not related to macroeconomic factors. The short-term upward trend remains in place for now.

On the 5-minute chart, trading can be based on the levels 1.2164-1.2170, 1.2241-1.2270, 1.2301, 1.2372-1.2387, 1.2445, 1.2502-1.2508, 1.2547, 1.2613, 1.2680-1.2685, 1.2723, and 1.2791-1.2798. No significant events or reports are scheduled in the UK or the US on Monday, so strong price fluctuations are unlikely. The pound may continue to drift toward the ascending trend line.

Core Trading System Rules:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. 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.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. 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.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. 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.