Analysis of Friday's Trades

1H Chart of GBP/USD

The GBP/USD pair showed a sharp decline on Friday, which is extremely difficult to explain—even in hindsight. Yes, the British pound is overbought and unjustifiably expensive. The only reason for its growth in recent months has been Donald Trump. The market openly ignored all other news, events, and reports. What caused the U.S. dollar to gain 300 pips on Friday? The NonFarm Payrolls report showed a strong figure, but the U.S. unemployment report turned out worse than forecast. Jerome Powell took a hawkish stance, but his speech occurred in the evening, while the dollar began strengthening in the early morning. All in all, chaos continues to dominate the market.

5M Chart of GBP/USD

On Friday, many trading signals were generated in the 5-minute timeframe. Most of them were indeed tradable—the pound moved more technically than the euro. However, the movements were very strong. The pound could have been sold as early as the start of the European session after a bounce from the 1.3102–1.3107 area. Later, the pair dropped to the 1.2980–1.2993 zone and formed a buy signal. From the 1.3043 level, it was again possible to sell down to 1.2860.

Trading Strategy for Monday:

On the hourly timeframe, the GBP/USD pair should have started a downward trend long ago, but Trump keeps doing everything to push the dollar even lower. Since the official start of the global trade war, we can't even attempt to predict how currency pairs will move in the long term. On Friday, we saw a substantial decline, which could mark the beginning of a significant correction. However, the market remains at the mercy of Trump and his decisions. We may soon witness another collapse of the U.S. dollar if the trade war continues to escalate.

The GBP/USD pair may remain in turmoil on Monday. Predicting the direction of the pound or the dollar today is virtually impossible. The movements are very strong and chaotic. The only option is to trade based on the levels in the 5-minute timeframe.

On the 5-minute chart, trading can currently be done using the following levels: 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, 1.3145–1.3167, 1.3225, 1.3272. No significant events or reports are scheduled for Monday in the UK or the U.S. However, volatility may still be very high today, and the movements may remain erratic.

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.