Wednesday's Trade Analysis:
1H Chart of GBP/USD
The GBP/USD pair traded with minimal volatility on Wednesday, as if it simply took a one-day pause. The upward movement resumed on Thursday night, with the British pound, like the euro, seeking a return to its annual highs. The dollar is rapidly losing ground not so much because the situation in the Middle East is free from new escalations, but rather because Donald Trump wants to end the war. The dollar's decline results from the fact that the geopolitical factor has receded into the background, as it cannot indefinitely influence market sentiment. Thus, the pound and euro have been rising for nearly two weeks. There was no macroeconomic backdrop yesterday, and the speeches from Andrew Bailey and Christine Lagarde did not provide the market with any new information. The upward trend on the hourly timeframe remains intact, and the British currency does not require local support to continue its growth. The dollar has many grounds for its decline, many of which stem from last year.
5M Chart of GBP/USD
On the 5-minute timeframe, a buy signal was formed on Wednesday in the area of 1.3529-1.3543. By the end of the day, the pair rose only 15 pips, but the trade could be carried over to Thursday in anticipation of continued upward movement. The target is 1.3643.
How to Trade on Thursday:
On the hourly timeframe, the GBP/USD pair continues to form an upward trend. There are no global grounds for medium-term dollar growth; therefore, in 2026, we expect a resumption of the global upward trend from 2025. For this to happen, geopolitical tensions around the world need to continue to decrease, but there is also another scenario— the market may simply turn a blind eye to geopolitics after two months of trading solely on this factor.
On Thursday, novice traders may consider short positions if the price consolidates below the 1.3529-1.3543 area, targeting 1.3476-1.3489. Consolidation above the area of 1.3529-1.3543 allows for maintaining long positions with targets of 1.3643-1.3652.
On the 5-minute timeframe, levels to consider include 1.3175-1.3180, 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3476-1.3489, 1.3529-1.3543, 1.3643-1.3652, 1.3695, and 1.3741-1.3751. Today, reports on GDP and industrial production will be published in the UK. Neither is the most important and significant. In the U.S., the macroeconomic backdrop is even weaker. Therefore, movements of the GBP/USD pair today are unlikely to depend on economic reports.
Key Principles of the Trading System:
- The strength of the signal is determined by the time it took to form the signal (bounce or level breakthrough). The shorter the time, the stronger the signal.
- If two or more trades were opened around any level based on false signals, all subsequent signals from that level should be ignored.
- In a range, any pair can generate a lot of false signals or may not generate them at all. Technical levels may be ignored.
- On the hourly timeframe, it is advisable to trade MACD signals only when volatility is good, and the trend is confirmed by a trendline or trend channel.
- If two levels are located too close together (5-20 pips apart), they should be considered a support or resistance area.
- After moving 15 pips in the correct direction, a Stop Loss should be set to breakeven.
What to Look for on the Charts:
Price levels of support and resistance are levels that serve as targets when opening buys or sells. Take Profit levels can be placed around them.
Red lines represent channels or trend lines that show the current trend and indicate the direction in which it is preferable to trade now.
The MACD indicator (14,22,3) – the histogram and the signal line – is a supporting indicator that can also be used as a source of signals.
Important speeches and reports (always included in the news calendar) can significantly affect the movement of the currency pair. Therefore, during their release, trading should be done with utmost caution, or traders should exit the market to avoid sharp price reversals against the previous movement.
Beginning traders in the forex market should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success.
