Monday Trade Review:

1H Chart of GBP/USD

On Monday, GBP/USD also continued its upward movement, even without local drivers. Still, the pound remains well-positioned against the U.S. dollar, so it can rise even without fresh macroeconomic inputs. Recall that the trend on the hourly timeframe is bullish, on the daily timeframe as well, while the U.S. macroeconomic backdrop collapsed in September. This week, the Bank of England will keep its key rate unchanged, while the Federal Reserve is expected to cut it. Over the next year, the Fed may cut rates multiple times, whereas the BoE is very unlikely to do so. Everything points to the dollar continuing to fall, with only technical corrections offering it support, as we have repeatedly noted. A consolidation below the trendline would signal another technical correction.

5M Chart of GBP/USD

On the 5-minute timeframe, two signals appeared on Monday, both of which could be worked through. First, the price broke through the 1.3574–1.3590 area, and then bounced from it on the upside. If U.K. data do not disappoint today, the pair may continue rising toward 1.3643. Volatility remains low, but with the BoE and Fed meetings set for Wednesday and Thursday, stronger market moves can be expected midweek.

How to Trade on Tuesday:

On the hourly timeframe, GBP/USD continues its uptrend, while on higher timeframes it shows signs of resuming the "2025 trend." As we said earlier, there are no grounds for medium-term dollar growth, so we expect further strengthening of the pound.

On Tuesday, GBP/USD may well continue its rise, as the 1.3574–1.3590 area has been successfully broken. The nearest target area is 1.3643–1.3652. Sell signals can also be considered, as the upward movement remains weak and includes corrections.

On the 5-minute timeframe, trading levels are: 1.3102–1.3107, 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3413–1.3421, 1.3466–1.3475, 1.3529–1.3543, 1.3574–1.3590, 1.3643–1.3652, 1.3682, 1.3763. On Tuesday, the U.K. will publish reports on unemployment, jobless claims, and wages. While not the most critical, they could trigger some reaction. In the U.S., industrial production and retail sales are due, which may only spark volatility if the numbers strongly deviate from expectations.

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.