Trade Analysis of Friday:

1H Chart of the GBP/USD Pair

The GBP/USD pair also showed certain movement on Friday, but it was not too strong. It can be said that the US dollar showed growth for appearances' sake. On this day, Kevin Warsh again took a distinctly "hawkish" position, which the market appreciated, but not as much as a month or two ago. The head of the Federal Reserve again spoke about the unacceptability of high inflation; however, in previous instances, such statements did not lead to an increase in the Fed's key interest rate. Thus, the market slightly raised its hawkish expectations but did not fully believe Warsh. Nevertheless, the price settled below the ascending channel, so technically, a new downward trend is beginning. We do not believe that Friday will mark the start of a new dollar trend; however, for some time, the GBP/USD pair may decline based on at least technical factors. Volatility today will likely be low again.

5M Chart of the GBP/USD Pair

In the 5-minute timeframe, one sell signal was formed on Friday and remains relevant as of Monday. For 10-12 hours, the pair formed a rebound from the 1.3587-1.3598 area and managed to execute it during the American trading session. Thus, novice traders had grounds to open short positions.

How to Trade on Monday:

On the hourly timeframe, the GBP/USD pair began a downward trend, albeit corrective. In our opinion, the British pound should continue to strengthen in the medium term, but it is currently in a correction. On the weekly timeframe, movement from the lower boundary of the sideways channel to the upper boundary is ongoing and not yet complete. Friday improved the sentiment for the American currency, but this support is unlikely to last long for the dollar.

On Monday, novice traders can remain in short positions targeting 1.3456-1.3476. Long positions can be opened targeting 1.3587-1.3598 if the price rebounds from the 1.3456-1.3476 area.

On the 5-minute timeframe, trading can currently be conducted at the following levels: 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3456-1.3476, 1.3587-1.3598, 1.3631-1.3641, 1.3695, and 1.3741. On Monday, there are no significant events or publications scheduled in the UK or the US. Thus, traders will have nothing to react to today, and volatility may drop again to its lowest levels.

Main Rules of the Trading System:

1. The strength of the signal is assessed based on the time it took to form (bounce or level breakthrough). The less time required, the stronger the signal.
2. If two or more trades are opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can generate a plethora of false signals or none at all. Technical levels may be disregarded.
4. When trading based on MACD signals on the hourly timeframe, it is advisable to do so only when volatility is high and a trend line or channel supports the trend.
5. If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.
6. After a 15-pip move in the correct direction, a Stop Loss should be set to break even.

What the Charts Show:

Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.

Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.

The MACD indicator (14,22,3) – histogram and signal line – is a supporting indicator that can also be used as a source of signals.

Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.

Beginners in Forex trading should remember that not every trade can be profitable. Developing a clear strategy and proper money management are essential for long-term trading success.