Trade review for Wednesday:

1H chart of the GBP/USD pair

The GBP/USD pair rose modestly on Wednesday, and the market's reaction to the Federal Reserve meeting was weak. It's still too early to draw firm conclusions after the announcement, but the usual price spikes did not materialize. In fact, most analysts' forecasts proved off the mark. Some expected renewed dollar strength if Kevin Warsh emphasized elevated inflation — that did not happen. Others expected dollar weakness because the hawkish scenarios had already been priced in and U.S. labor data for September disappointed — that also did not occur. As of Thursday morning, sterling remains within its own trading paradigm and the euro within its own. The euro sits at low levels and could resume its decline at any time even without fresh fundamental news. The pound, however, appears to be forming an uptrend and may continue higher, as technical signals point north.

5M chart of the GBP/USD pair

On the 5-minute timeframe, two sell signals formed on Wednesday. The price bounced twice from the 1.3319–1.3331 area but failed to produce a meaningful drop. Opening trades immediately after the Fed meeting was generally not a good idea, so novice traders are better off waiting for new, clearer signals to form.

How to trade on Thursday:

On the hourly timeframe, GBP/USD continues to form a new uptrend. Sterling has shown, and continues to show, greater resilience versus the dollar, so it has a better chance of an uptrend than the euro. The technical picture across timeframes supports sterling's rise. The macro backdrop and the dollar's stretched condition also support GBP/USD.

On Thursday, novice traders can consider short positions with targets of 1.3259–1.3267 if the price bounces again from the 1.3319–1.3331 area. Consider long positions with targets of 1.3380–1.3386 if price holds above the 1.3319–1.3331 area.

On the 5-minute TF consider trading the levels 1.3043, 1.3096–1.3107, 1.3175–1.3180, 1.3259–1.3267, 1.3319–1.3331, 1.3380–1.3386, 1.3456–1.3476, 1.3587–1.3598, 1.3631–1.3641. Key events on Thursday include a package of U.S. macro releases, notably Q3 GDP and the PCE index, so expect strong market moves in the afternoon U.S. session.

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 too close together (within 5-20 pips), treat them as 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 serve as targets for opening buy or sell trades or as sources of signals.

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

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also provide signals.

Important speeches and reports (listed in the news calendar) can significantly influence currency pair movements. Therefore, during their release, traders should approach trading with utmost caution, or exit the market to avoid sudden reversals against the preceding move.

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.