26.05.202606:04 Forex Analysis & Reviews: How to Trade the GBP/USD Currency Pair on May 26? Simple Tips and Trade Analysis for Beginners

Analysis of Monday's Trades:

1H Chart of GBP/USD:

The GBP/USD pair also traded with low volatility on Monday, showing only interesting movements at the market open overnight. The British pound maintained an upward slope, forming a new ascending trend line. However, we cannot attribute the British currency's growth over the past week to geopolitics. It is worth noting that the euro showed almost no growth during the same period. Thus, we consider that the GBP/USD pair is currently correcting against the preceding unjustified drop of 300 pips. If this is the case, the correction will soon be completed, the correlation between the euro and the pound will be restored, and the market will once again await geopolitical news characterized by facts and events, rather than the wishes of Donald Trump, which he presents as established facts. At this time, we cannot say that the geopolitical situation in the Middle East has improved. However, it hasn't worsened either.

5M Chart of GBP/USD:

On the 5-minute timeframe, one buy signal was generated on Monday—the price rebounded from 1.3476 and rose about 15 pips by the end of the day. Better than nothing, but movements in the market are currently very weak. We remind novice traders that without movements, no signals will yield profits.

How to Trade on Tuesday:

On the hourly timeframe, the GBP/USD pair has begun to form an upward trend, but without geopolitical support, it will be difficult to sustain growth. However, without a resumption of full-scale war in the Middle East, the dollar cannot be expected to rise as it did in February and March. Individual events may still provoke their strengthening, but we do not believe the market will initiate a new wave of risk aversion.

On Tuesday, novice traders may open short positions targeting 1.3380-1.3386 if the price consolidates back below the 1.3456-1.3476 area. A consolidation above the 1.3456-1.3476 area allows for remaining in long positions with targets of 1.3587-1.3598.

On the 5-minute timeframe, trading can currently occur at levels 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, 1.3695, and 1.3741-1.3751. Today's event calendars for the UK and the U.S. are completely empty, so the market will focus on geopolitics and technical analysis, and volatility may remain low.

Main Rules of the Trading System:

1. The strength of the signal is determined by the time it took to form the signal (bounce or breakout of the level). The less time it took, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from this level should be ignored.
3. In a flat market, any pair can generate many false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, it is preferable to trade signals from the MACD indicator only in the presence of good volatility and a trend that is confirmed by a trend line or trend channel.
5. If two levels are too close together (5-20 pips apart), treat them as a support or resistance zone.
6. After a move of 15 pips in the right direction, a Stop Loss should be set to breakeven.

What is on the Charts:

Price levels (areas) of support and resistance – levels that are targets when opening purchases or sales, or sources of signals.

Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.

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

Important speeches and reports (contained in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be done as cautiously as possible, or one should exit the market to avoid a sharp price reversal against the preceding movement.

Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and effective money management are key to long-term trading success.