Monday's trade review: GBP/USD 1H chart

On Monday, the GBP/USD pair also moved higher, rebounding after its late-week collapse. Recall that the pound had at least some reasons for falling, which is why its decline was sharper than the euro's, and its recovery weaker. On Monday, there were no significant events in either the UK or the US. Speeches by Bank of England's Huw Pill and Andrew Bailey gave the market no fresh or important information. Thus, the pound recovered mainly on traders' enthusiasm. We do not believe the factors that drove the pound lower last week will remain relevant this week. Nor do we think the fundamental backdrop for GBP/USD has reversed 180 degrees to justify further decline. The pound still looks more attractive compared to the US dollar. However, technically, the trend on the hourly timeframe is downward, so further downside is possible. A trendline cannot be drawn now, as there are no two clearly defined highs.

GBP/USD 5M chart

On the 5-minute timeframe, one buy signal formed early in the European session. The price broke through the 1.3466–1.3475 level, allowing beginners to open long positions. After that, the pound kept rising, so long positions could be held throughout the day. The target area of 1.3529–1.3543 was nearly reached overnight into Tuesday. Profit could be taken even by closing the trade at this point.

How to trade on Tuesday: On the hourly timeframe, GBP/USD has consolidated below the trendline, which allows for a new technical correction after several weeks of growth. As mentioned earlier, we see no grounds for medium-term dollar strength, so in the medium term, only northward movement is expected. The daily chart clearly shows the current trend.

On Tuesday, GBP/USD may resume its decline. A rebound from the 1.3529–1.3543 level would allow for new short positions with a target of 1.3466–1.3475. Technically, such a rebound has already occurred, though with slight deviation. New long positions could be opened on a close above 1.3529–1.3543, targeting 1.3574–1.3590.

On the 5-minute timeframe, trading can be done around the following levels: 1.3102–1.3107, 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3413–1.3421, 1.3466–1.3475, 1.3529–1.3543, 1.3574–1.3590, 1.3643–1.3652, 1.3682, 1.3763. On Tuesday, the UK and US will release services and manufacturing PMI data, and Jerome Powell will speak in the evening. Mr. Powell is unlikely to provide anything new after the Fed meeting, and PMI releases may only provoke a reaction if the results differ significantly from forecasts.

Key rules of the trading system:

1. The strength of a signal depends on the time it took to form (rebound or breakout). The less time required, the stronger the signal.
2. If two or more false signals occur around a level, all subsequent signals from that level should be ignored.
3. In flat markets, a pair may generate many false signals or none at all. In any case, once flat signs appear, it is best to stop trading.
4. Trades should be opened between the start of the European session and mid-US session. After that, all trades should be closed manually.
5. On the hourly timeframe, MACD signals should only be used when there is good volatility and a trend confirmed by a trendline or channel.
6. If two levels are very close (5–20 points apart), treat them as a support or resistance area.
7. After a move of 20 points in the right direction, set Stop Loss to breakeven.

What's on the charts:

• Support and resistance levels: price targets for buy/sell trades; Take Profit levels can be placed nearby.
• Red lines: channels or trendlines that show the current trend and preferred trading direction.
• MACD (14, 22, 3): histogram and signal line, used as an additional source of signals.

Important: Major speeches and reports (always listed in the economic calendar) can strongly influence a currency pair's movement. During such events, trade with maximum caution or exit the market to avoid sharp reversals against the prior trend.

Note for beginners: Not every trade can be profitable. A clear strategy and money management are key to long-term success in trading. Impulsive decisions based on the current market situation are, by definition, a losing strategy for intraday traders.