Analysis of Monday's Trades

1H Chart of GBP/USD

On Monday, GBP/USD attempted to continue its upward movement, even though it had fewer reasons to do so compared to EUR/USD. While the UK recently released some positive economic data, and the Bank of England may adopt a more hawkish tone following the latest inflation report, we believe the British pound has already strengthened enough to begin a new local downtrend. This week, there is very little macroeconomic data expected, leaving the market without strong reasons to continue buying the British pound. Political and geopolitical news may influence traders' sentiment, but it is challenging to predict how most market participants will interpret these developments. The daily timeframe still indicates an ongoing upward correction, but even within this trend, the pound cannot rise indefinitely. On Monday, there were no significant economic events in either the U.S. or the UK.

5M Chart of GBP/USD

On the 5-minute timeframe, two strong trading signals emerged on Monday. Overnight, the price rebounded from the 1.2680-1.2685 range and subsequently dropped to the 1.2613 level, where it bounced again with notable precision. This scenario provided two excellent trading opportunities for novice traders, allowing them to secure profits of 40-50 pips.

Trading Strategy for Tuesday:

In the hourly timeframe, GBP/USD may begin a short-term downtrend, but all movements in recent weeks have been part of a correction in the daily timeframe. In the medium term, we still expect the pound to decline toward 1.1800, considering this the most logical outcome. The key is to wait for the daily timeframe's upward correction to conclude.

Given its significant gains in recent weeks, GBP/USD could start a new wave of downward movement on Tuesday. However, recent price action has been largely inconsistent and disconnected from the macroeconomic background, which will be sparse this week. The short-term upward trend remains intact for now.

On the 5-minute timeframe, key trading levels are 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, 1.2791-1.2798. No significant economic releases or events are scheduled in the UK or the U.S. on Tuesday, so strong price movements are unlikely. The pound may start drifting toward the ascending trendline.

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.