Trade Analysis for Thursday:
1-Hour Chart of the GBP/USD Pair
The GBP/USD pair moved similarly to the EUR/USD pair on Wednesday. The attempt to continue the upward movement ended without result, and a downward correction began, which is ongoing today. Volatility was ultra-low, but the upward trend is still intact. It can be said that the dollar received minimal support from the U.S. jobless claims report, which came in below forecasts; however, this report is absolutely secondary. In any case, there was virtually no movement throughout Wednesday. Thus, trading shifts to Friday and is likely to continue into next week. From our perspective, the British pound is expected to continue rising at the beginning of 2026, as suggested by nearly all timeframes. The macroeconomic and fundamental background has been absent for the past two days in both the UK and the U.S.
5-Minute Chart of the GBP/USD Pair
On the 5-minute timeframe, two trading signals were generated on Wednesday, which novice traders could have capitalized on if they wished. The price bounced twice from the level of 1.3529, which is part of the area 1.3529-1.3543. In both instances, the price moved down by about 20 pips. Today, the decline may continue, but it is unlikely to be strong.
How to Trade on Friday:
On the hourly timeframe, the GBP/USD pair has completed its flat and has once again started moving upwards. We fully support this development, as previously mentioned. There are no global grounds for medium-term dollar growth, so we anticipate movement only to the upside. Overall, we expect the global upward trend to resume in 2025, which could push the pair to the 1.4000 mark in the next couple of months.
On Friday, novice traders can consider new long positions if the price breaks the 1.3529-1.3543 area, targeting 1.3574-1.3590. Short positions will become relevant upon a new bounce from the area of 1.3529-1.3543, targeting 1.3437-1.3446.
On the 5-minute timeframe, trading can currently occur at the levels: 1.2913, 1.2980-1.2993, 1.3043, 1.3096-1.3107, 1.3203-1.3212, 1.3259-1.3267, 1.3319-1.3331, 1.3437-1.3446, 1.3529-1.3543, 1.3574-1.3590. There are no significant events scheduled in the UK or the U.S. on Friday, and market volatility has decreased following the relatively active Monday and Tuesday. The market is currently "thin," making it easier for market makers to move the price than usual, but this does not automatically mean they want to do so.
Key Rules of the Trading System:
- The strength of a signal is assessed by the time it takes to form the signal (bounce or breakout). The less time it takes, the stronger the signal.
- If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
- In a flat, any pair can create numerous false signals or none at all. In any case, it's better to stop trading at the first signs of a flat.
- Trades are opened during the period between the start of the European session and the middle of the American session, after which all trades must be closed manually.
- On the hourly timeframe, when trading based on signals from the MACD indicator, it is preferable to trade only when good volatility is present, and a trend is confirmed by a trend line or channel.
- If two levels are positioned too closely to each other (5 to 20 points), they should be viewed as a support or resistance area.
- After moving 20 pips in the right direction, set the Stop Loss to breakeven.
Chart Explanation:
- Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
- Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
- MACD Indicator (14, 22, 3): A histogram and signal line, a supplementary indicator that can also be used as a source of signals.
Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.
Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.
