Analysis of Wednesday's Trades

1H Chart of GBP/USD

On Wednesday, the GBP/USD pair showed a downward movement that finally aligned with the macroeconomic backdrop. During the day, traders were interested in two reports. In the UK, the inflation report was published, while in the US, it was the durable goods orders report. UK inflation for February came in lower than expected, and although this doesn't have much impact (inflation is still too high, and Andrew Bailey expects another increase in consumer prices), it was a formal reason for the pound's decline. The US durable goods orders report exceeded forecasts by nearly 2%, providing additional support for the US dollar. However, what did we see overnight? Another sudden rise of the pound for no apparent reason. The correction continues but is very weak, while the ascending trendline maintains a bullish market sentiment.

5M Chart of GBP/USD

Only one trading signal was formed in the 5-minute timeframe. During the European session, after the UK consumer price index was released, the price consolidated below the 1.2913 level and remained in a downward movement for the rest of the day. Therefore, novice traders could have closed a short position anywhere—it would have been profitable regardless.

Trading Strategy for Thursday:

GBP/USD should have already begun a downtrend in the 1-hour timeframe, but Trump is doing everything to prevent it. We still expect the pound to fall toward the 1.1800 target in the medium term. It is uncertain how long the decline of the dollar, influenced by Trump, will last. The technical picture across all timeframes could change dramatically when this movement ends. For now, long-term trends still point south. The pound's recent growth wasn't baseless, but once again, it was too strong and illogical.

On Thursday, GBP/USD may continue to decline, as the technical setup on the 1H chart supports this scenario. The pound is once again overbought and unjustifiably expensive.

Key levels to monitor on the 5-minute chart: 1.2301, 1.2372–1.2387, 1.2445,1.2502–1.2508,1.2547, 1.2613, 1.2680–1.2685, 1.2723, 1.2791–1.2798, 1.2848–1.2860, 1.2913, 1.2980–1.2993, 1.3043, 1.3102–1.3107. No crucial events or reports are scheduled for the UK on Thursday. However, the final Q4 GDP report will be released in the US. It's a reasonably important release, especially if the value comes in below forecasts, i.e., below 2.3% on a quarterly basis.

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 Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.

Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.