04.09.202604:47 Forex Analysis & Reviews: How to Trade the GBP/USD Currency Pair on September 4? Simple Tips and Trade Review for Beginners

Thursday Trade Review:

1H chart of the GBP/USD pair

The GBP/USD pair also rose during Thursday even though the macro backdrop suggested a decline. Recall that this week only the US ISM services business activity index supported the dollar; all other reports did not. However, yesterday, when the ISM index was released, the US currency fell. We noted earlier that a technical correction has been unfolding in the market over the past two weeks. Such corrections occur independently of fundamental or macroeconomic background. The market begins to take profits on long positions, which is why we observe declines. This is why the macro backdrop and the pair's movements did not match this week. Regarding Federal Reserve policy, we still do not believe the key rate will be raised in September. We see no basis for that. Therefore, there is no reason for stronger dollar gains beyond a correction.

5M chart of the GBP/USD pair

On the 5-minute TF on Thursday, one buy signal formed. During the Asian session, the price bounced from the 1.3456–1.3476 area and moved only upward until the end of the day. Thus, traders could open long positions in the morning and close them in profit of about 30–40 pips in the evening.

How to trade on Friday:

On the hourly TF, the GBP/USD pair continues a downward corrective trend. In our view, the pound should continue to rise in the medium term under any scenario, but it is currently in a correction. On the weekly TF, the move from the lower boundary of the lateral channel toward the upper boundary continues, and this move may not be complete. Last Friday improved the mood for the US dollar, but that support is unlikely to last long.

On Friday, novice traders may consider short positions targeting 1.3456–1.3476 if the price bounces from the 1.3587–1.3598 area. Long positions can be maintained with targets at 1.3587–1.3598 after a bounce from the 1.3456–1.3476 area.

On the 5-minute TF, you can trade the levels 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, 1.3741. No major events are scheduled in the UK on Friday, but they are not needed. In the US, important reports will be released today that the market has been awaiting since Monday — Nonfarm Payrolls and the unemployment rate. High volatility is expected in the afternoon.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are positioned too close to each other (within 5-20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance are levels that serve as targets when opening buy or sell trades, or as sources of signals.

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

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary 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 currency pairs. Therefore, during their release, trading should be approached with utmost caution, or traders should exit the market to avoid sudden reversals against the preceding movement.

Beginner forex traders 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.