Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair increased by 100 points on the 30-minute timeframe on Thursday, but at the same time it still remained inside the horizontal channel of 1.4100-1.4220. Thus, the flat continues, therefore, on the current timeframe, we continue to recommend ignoring all signals from the MACD indicator. Yesterday, novice traders had to pay attention to the US inflation report. However, it was this event that ultimately led to the main movement of the day. To be honest, it was very difficult to work it out. Since this report was very important, the response to it was appropriate. Especially considering the fact that the consumer price index has exceeded the forecast value. Thus, the dollar's fall on Thursday is absolutely logical. But it does not affect the current technical picture in any way.
5M chart of the GBP/USD pair
The picture of the pair's movement on the 5-minute timeframe reflects in more detail what happened during the past day. The movements in the European trading session were not the most pleasant, and in the US session, the quotes just surged on the US consumer price index. The first signal was formed early in the morning and cannot be called accurate and clear. At the moment when it became clear that the quotes were still below the level of 1.4111, the price rested on the next level of 1.4091, and then to the level of 1.4081, from which it eventually rebounded off, forming a buy signal, which also was very fuzzy. Theoretically, novice traders had the right to open long positions here. But, firstly, all the signals up to this point were very inaccurate. Second, US inflation should have been published within a few hours. Thirdly, even if the deal was opened, then at the beginning of the US trading session, the Stop Loss should definitely be set to breakeven. Thus, even if the newcomers opened long positions, they closed by Stop Loss, because before making its impressive jump to the upside, the pair initially dropped to almost the level of 1.4091. All subsequent trading signals (after the publication of inflation) should have been ignored altogether, as the movement became very strong and uncontrollable.
Trading tips for Friday:
At this time, the pound/dollar pair continues to trade in the horizontal channel of 1.4100-1.4220 on the 30-minute timeframe. Therefore, we still recommend not tracking signals from the MACD indicator until the trend movement has recovered. The important levels on the 5 minute timeframe are 1.4111, 1.4165, 1.4191 and 1.4219. We recommend trading with them. The price can rebound off them or overcome them. As before, we set Take Profit at a distance of 40-50 points. At the 5M TF, you can use all the nearest levels as targets, but then you need to take profit, taking into account the strength of the movement. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven. Bank of England Governor Andrew Bailey is set to speak on Friday in the UK, which is potentially a very important event. Also, early in the morning, the report on GDP for April, as well as industrial production, will be published. We believe that macroeconomic reports will have little impact on the pair, and in Andrew Bailey's speech, everything will depend on what the head of the Bank of England says.
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.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator 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 announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
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.