Tuesday Trade Review:

1H Chart of GBP/USD

The GBP/USD pair also traded lower on Tuesday, but by the end of the day, the British pound lost much less than the euro. Thus, the pound's position remains much more promising compared to the euro. On the second trading day of the week, there were no important events in the UK, while in the US, the annual Non-Farm Payrolls report was published. Although the total Nonfarm figure for the last 12 months was revised downward by 911,000, this didn't really upset traders. We would say that the report was largely ignored. Nevertheless, we believe that the negative fundamental and macroeconomic backdrop continues to build up. Over the past two months, market volatility has fallen, but it won't stay that way forever. Sooner or later, the market will "wake up" and will immediately recall all the failures in US data and all the negative news. So maybe current market movements aren't the best, but the dollar still has no reason to rise.

5M Chart of GBP/USD

On the 5-minute chart on Tuesday, there were as many as four trading signals. During the entire European session, the price bounced from the 1.3574–1.3590 area, so novice traders could have opened short positions. Then, there were bounces from 1.3543, from 1.3574, and a breakout of the 1.3529–1.3543 area. We do not consider yesterday's decline logical; the last two trading signals were clearly at odds with the character of the NonFarm Payrolls report.

How to Trade on Wednesday:

On the hourly chart, the GBP/USD pair is showing signs of resuming the uptrend, and on higher timeframes, the uptrend remains intact. Thus, the moves we have seen recently on the hourly chart are just a pause within the larger uptrend. As we have said before, we see no reason for a medium-term dollar rally, so we expect the British currency to keep growing.

On Wednesday, the GBP/USD pair may resume moving north, as yesterday's drop was not justified. We believe the price could break through the 1.3529–1.3543 area today, which would signal buying opportunities. A bounce from this area would allow opening short positions targeting 1.3466–1.3475.

On the 5-minute chart, you can currently trade at levels: 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. No significant events are scheduled for Wednesday in the UK, while in the US, the Producer Price Index will be published, which may only provoke a trader reaction in the case of a strong deviation from forecasts.

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.