Trade Analysis for Friday:

1H chart of the GBP/USD pair

The GBP/USD pair showed a modest rise on Friday, which does not correspond to the macroeconomic backdrop and the events of the day, week, or even the past month. On Friday, the US released poor Nonfarm Payrolls and unemployment figures that contained nothing positive. Since these reports directly influence Federal Reserve policy, they cannot be called secondary. The readings were striking: the market did not expect a rise in unemployment and had looked for 90k new jobs but got 29k and a 30k downward revision to the prior month. We should have seen a large dollar drop and a sharp surge in GBP/USD. But as we have said many times, the market continues to buy the US dollar almost every day and ignores factors that argue against it. The downtrend has persisted for nearly a month. The dollar rises on any news.

5M chart of the GBP/USD pair

On the 5-minute TF on Friday, one very good buy signal was formed. During the Asian session, the price bounced from the 1.3175–1.3180 area and then spent most of the day moving upward. In the American session, the 1.3259–1.3267 area was almost reached, where traders could take profit on longs.

How to Trade on Monday:

On the hourly TF, GBP/USD continues a downward trend that has become a full-fledged, powerful move. The fundamental backdrop for the dollar improved because the Fed indicated it was ready to continue tightening monetary policy. However, two and a half weeks have passed since then, and the market still buys the dollar aggressively. Therefore, we strongly doubt that Fed policy alone explains this. We consider the current movement completely illogical.

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

On the 5-minute TF you can trade the levels 1.3043, 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 Monday, while the US will release the ISM services index. However, we see little point in that report since the market largely refuses to sell the dollar.

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.