Trade Review for Monday:

1H Chart of the GBP/USD Pair

The GBP/USD pair corrected slightly on Monday—small, but still a correction. A two-day correction remains minimal, but it's better than nothing. The euro (and euro-crosses) could not even show such a correction. Thus the hourly downtrend remains intact, as evidenced by the descending trend line. No important global events occurred on Monday, and most analysts continue to scramble for explanations of the recent dollar surge. Any argument that fits dollar strength is used: a hawkish shift in Federal Reserve views, increased geopolitical instability, rising global tensions. The fact that there has been no new escalation in geopolitical instability seems to matter little. Recall that the conflict between Ukraine and Russia has been going on for five years and the conflict in the Middle East for eight months. So nothing materially new has happened lately. Talks in either case are not progressing, and there are no near-term prospects for peace, as before.

5M Chart of the GBP/USD Pair

On the 5-minute timeframe on Monday, no clear trading signals were generated. Price rose slightly in the first half of the day, reached the 1.3259–1.3267 area, and then traded along that band for the rest of the day. There was no convincing rebound or breakout.

How to Trade on Tuesday:

On the hourly timeframe, GBP/USD continues a downward trend that has become a full-fledged move. The fundamental backdrop for the dollar improved after the Fed signaled readiness to continue tightening monetary policy. However, two weeks have passed since then, and the market still focuses almost exclusively on that one factor. Therefore, we consider the current move entirely illogical.

On Tuesday, novice traders can consider short positions with a target of 1.3175–1.3180 if price rebounds from the 1.3259–1.3267 area. Open long positions with a target of 1.3319–1.3331 if price consolidates above the 1.3259–1.3267 area.

On the 5-minute timeframe you can trade the levels 1.3096–1.3107, 1.3175–1.3180, 1.3259–1.3267, 1.3319–1.3331, 1.3380–1.3386, 1.3456–1.3476, 1.3587–1.3598, 1.3631–1.3641. No important events are scheduled in the UK on Tuesday, and the US will publish the JOLTS vacancies report, a lagging indicator generally of limited importance for traders. We expect volatility to remain fairly low again today.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are too close together (within 5-20 pips), treat them as a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance serve as targets for opening buy or sell trades or as sources of signals.

Red lines indicate channels or trend lines that show the current trend and the preferred trading direction.

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also provide signals.

Important speeches and reports (listed in the news calendar) can significantly influence currency pair movements. Therefore, during their release, traders should approach trading with utmost caution, or exit the market to avoid sudden reversals against the preceding move.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.