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19.02.202404:15 Forex Analysis & Reviews: Trading plan for GBP/USD on February 19. Simple tips for beginners

Analyzing Friday's trades:

GBP/USD on 1H chart

Exchange Rates 19.02.2024 analysis

GBP/USD also exhibited a bullish correction on Friday, but neither bulls or bears had a strong advantage. The UK started off the day by releasing a retail sales report, which turned out to be stronger than expected. But for some reason, the market refused to react to this report, although we had the right to expect that the British pound would rise. In the second half of the day, two U.S. reports (Producer Price Index and University of Michigan Consumer Sentiment Index) triggered mixed movements. From a macroeconomic perspective, we saw absolutely logical movements.

The downtrend persists, but in general, we're mostly seeing a sideways movement rather than a downtrend. The last two lows may draw an uptrend line. Therefore, we can't confirm the pair's successive movement. Recently, it has been quite difficult to predict the pair's direction. However, take note that almost all fundamental, macroeconomic, and long-term technical factors suggest that the pound will fall further.

GBP/USD on 5M chart

Exchange Rates 19.02.2024 analysis

Only one signal was generated on the 5-minute timeframe. During the European trading session, the price reluctantly worked off and bounced from the level of 1.2605, after which it almost managed to reach the level of 1.2544, it fell short by only 5 pips. The short position could have been manually closed when the US Consumer Sentiment Index was published, as this report was expected to weigh on the dollar. Therefore, it was possible to earn a few dozen pips. There was no rebound from the level of 1.2544, so there was no reason to open long positions.

Trading tips on Monday:

On the hourly chart, GBP/USD left the sideways channel of 1.2611-1.2787 and is making every effort to start a downtrend. However, it is not going well. Both an ascending trendline and a descending one can be formed on the hourly timeframe. There is no clear trend. In the medium-term, we expect the pound to exhibit a downward movement, but now it depends on the market. There is no basis for drawing conclusions about a possible rise in the British currency.

The key levels on the 5M chart are 1.2270, 1.2310, 1.2372-1.2387, 1.2457, 1.2502, 1.2544, 1.2605-1.2611, 1.2688, 1.2725, 1.2787-1.2791, 1.2848-1.2860, 1.2913, 1.2981-1.2993. On Monday, there are no events or resorts lined up in the UK or the US. There will be nothing to react to, so we do not expect strong trend movements.

Basic trading rules:

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

How to read charts:

Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.

Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.

The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.

Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Paolo Greco,
Analytical expert of InstaSpot
© 2007-2024
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