Analysis of Thursday's Trades

1H Chart of GBP/USD

The GBP/USD pair continued to trade sideways on Thursday. There was significantly less news regarding the British currency compared to the euro, but the movements were almost identical. The British currency appears to be struggling at the moment. After three days of flat trading, it seems to be merely following the euro's lead.

The technical outlook is quite uncertain. The ongoing three-week upward correction may extend for another three weeks; however, both the British pound and the euro currently have few reasons for further growth. The market has already reacted to Donald Trump's return to power, and it is unrealistic to keep selling the dollar solely because Trump wishes to impose tariffs worldwide. Recent macroeconomic data has indicated a likelihood of further declines for the British currency rather than growth. Nevertheless, a correction on the daily time frame was necessary. The main question now is: how much longer will this correction last?

5M Chart of GBP/USD

In the 5-minute time frame, the price movements on Thursday were remarkably chaotic for the third consecutive day, so we didn't even bother marking all the trading signals. The price fluctuated wildly throughout the day, disregarding any established levels and basic trading logic. The most outrageous moment occurred during the night when the pound experienced a 45-pip drop in just five minutes. Overall, there seems to be very little rationale behind the current price movements.

Trading Strategy for Friday:

On the hourly timeframe, the GBP/USD pair continues to form a short-term upward trend, which is essentially a correction. In the medium term, we fully expect the pound to resume its decline toward 1.1800, as we believe this is the only logical scenario. The key now is to wait for the downtrend to resume, using the trendline to help determine when the correction has ended.

On Friday, the GBP/USD pair may attempt to continue a downward pullback, as the 1.2502–1.2508 zone has still not been breached. However, the movements remain highly unusual and erratic.

On the 5-minute timeframe, trading can be done using the following levels: 1.2010, 1.2052, 1.2089-1.2107, 1.2164-1.2170, 1.2241-1.2270, 1.2301, 1.2372-1.2387, 1.2445, 1.2502-1.2508, 1.2547, 1.2633, 1.2680-1.2685, 1.2723, and 1.2791-1.2798. For Friday, no significant events are scheduled in the UK, while in the US, the Core PCE Price Index will be released. This may trigger a localized market reaction, but it is unlikely to be strong.

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 speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.

Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.