Trade Analysis of Thursday:

1H Chart of the GBP/USD Pair

The GBP/USD pair struggled to determine its direction throughout Thursday. From the very start of the day, the British pound aimed for a correction, but then an inexplicable decline was followed by a rise after a decent U.S. GDP report for the first quarter. Thus, on Thursday, there was no logic in the movements of the GBP/USD instrument. It should be noted that the GDP report was published in the U.S., but perhaps other reports triggered a decline in the American currency? No. The personal consumption expenditures (PCE) price index matched market expectations, and although durable goods orders decreased by 4.5%, this also aligned with expert forecasts. Therefore, the market could only react to the GDP report, which turned out to be more positive than forecasts. In general, the British pound has long been overdue for at least a slight recovery, as we do not consider its recent decline to be justified.

5M Chart of the GBP/USD Pair

In the 5-minute timeframe, three trading signals were formed on Thursday, but unfortunately, none of them resulted in meaningful profits for traders. Only the last buy signal could have provided profit, but that was the one that should not have been acted upon, as the first two in the area of 1.3175-1.3180 were false signals.

How to Trade on Friday:

On the hourly timeframe, the GBP/USD pair has left the sideways channel, but we doubt that the decline will continue. Of course, if serious reasons for a new strengthening of the dollar arise, this scenario is possible. However, at this moment, we do not see them. The conflict in the Middle East is either not completely resolved or is on pause. The Federal Reserve has only declared a possible rate hike by the end of the year, which may not happen, and the market responded with a bullish trend for the pound on Monday following Keir Starmer's resignation.

On Friday, novice traders may open new short positions targeting 1.3096-1.3107 if the price consolidates below the 1.3175-1.3180 area. A price rebound from the area of 1.3175-1.3180 will allow for the opening of long positions with a target of 1.3259-1.3267. Volatility has noticeably decreased in recent days, which should be taken into account.

On the 5-minute timeframe, trading can now consider the following 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, and 1.3695. There are no important data releases scheduled in the UK on Friday, while the U.S. will publish the University of Michigan consumer sentiment index, which is unlikely to be significant at this time.

Basic Rules of the Trading System:

1. The strength of a signal is determined by the time required to form it (a bounce or a breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a particular level based on false signals, subsequent signals from that level should be ignored.
3. In a flat market, any pair may form many false signals or none at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be executed only when volatility is good, and a trend is confirmed by a trend line or channel.
5. If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be set at breakeven.

What's on the Charts:

Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.

Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.

The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.

Beginners trading in the forex market 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.