FX.co ★ How to Trade the GBP/USD Currency Pair on December 16? Simple Tips and Trade Analysis for Beginners

Analysis of Monday's Trades:

1H Chart of the GBP/USD Pair

The GBP/USD pair also traded very sluggishly on Monday. The market found no compelling reasons to open positions ahead of several blocks of important data and fundamental events in the US, EU, and the UK. Reports will begin publication today. If interesting reports are released in the Eurozone, they are not particularly important, whereas in the UK, they are indeed crucial. For example, the unemployment rate, which has been rising recently, directly affects the Bank of England's monetary policy. The next meeting of the BoE is scheduled for this Thursday, and in the meantime, UK inflation will also be published, which significantly influences the Bank's key rate. Not to mention the US Non-Farm Payroll and unemployment reports, which are not only important for the Federal Reserve but have not been published for several months. Thus, it looks like we will see sharp, strong movements not only today but throughout the week.

5M Chart of the GBP/USD Pair

On the 5-minute timeframe on Monday, no trading signals were formed as the price did not approach any significant levels. Therefore, there were no grounds for novice traders to open trades for the second consecutive day.

How to Trade on Tuesday:

On the hourly timeframe, the GBP/USD pair continues to form a local upward trend. As mentioned, there are no global factors driving medium-term dollar growth, so we expect movement only to the upside. Overall, we also anticipate the resumption of the global upward trend of 2025, which could lead the pair to the 1.4000 mark in the coming months.

On Tuesday, novice traders can look for new long positions if the price bounces off the trend line or the 1.3319-1.3331 area, targeting 1.3413-1.3421. If the specified area is broken, short positions will become relevant with a target at 1.3212. However, today the macroeconomic background will take precedence over the technical picture.

On the 5-minute timeframe, the levels to consider for trading are 1.2913, 1.2980-1.2993, 1.3043, 1.3096-1.3107, 1.3203-1.3212, 1.3259-1.3267, 1.3319-1.3331, 1.3413-1.3421, 1.3466-1.3475, 1.3529-1.3543, and 1.3574-1.3590. On Tuesday, important reports concerning business activity, unemployment, the number of unemployed, and wages are scheduled in the UK. In the US, even more significant reports, including Non-Farm Payrolls and the unemployment rate, as well as less critical reports such as ADP and S&P business activity indices for the services and manufacturing sectors, will be released.

Key Rules of the Trading System:

1. The strength of a signal is assessed by the time it takes to form the signal (bounce or breakout). The less time it takes, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can create numerous false signals or none at all. In any case, it's better to stop trading at the first signs of a flat.
4. Trades are opened during the period between the start of the European session and the middle of the American session, after which all trades must be closed manually.
5. On the hourly timeframe, when trading based on signals from the MACD indicator, it is preferable to trade only when good volatility is present, and a trend is confirmed by a trend line or channel.
6. If two levels are positioned too closely to each other (5 to 20 points), they should be viewed as a support or resistance area.
7. After moving 20 pips in the right direction, set the Stop Loss to breakeven.

Chart Explanation:

• Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
• Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
• MACD Indicator (14, 22, 3): A histogram and signal line, a supplementary indicator that can also be used as a source of signals.

Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.

Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.