Analysis of Friday's Trades

1H Chart of GBP/USD

On Friday, the GBP/USD pair also ended its downward movement, which was merely a technical correction. After Jerome Powell's speech, which contained nothing that could have triggered a collapse of the dollar, the pair's quotes surged upward by 120 pips. For us, this outcome was not surprising, as we repeatedly warned traders — the uptrend remains intact, so the correction was expected to end with a new upward wave. The global fundamental backdrop has not changed; all the factors that pushed the dollar into decline in the first half of the year remain relevant. Therefore, with or without Powell, the dollar will continue to weaken. For dollar growth to be considered, either changes in the fundamental background or strong reversal signals on higher timeframes would be needed. In the UK, there were no important reports on Friday, and earlier macroeconomic data had not attracted much interest from traders either.

5M Chart of GBP/USD

On the 5-minute timeframe on Friday, several trading signals formed. The first buy signal near the 1.3413–1.3421 area was generated precisely during Powell's speech, which made it nearly impossible to trade. However, just 5 minutes later, another buy signal appeared — a breakout of the 1.3466–1.3475 area, which traders could have managed to work through. After that, the price rose to the 1.3518–1.3532 area, where long positions could be closed in profit.

Trading Strategy for Monday:

On the hourly timeframe, GBP/USD shows that the downward trend has ended, and a new upward trend is starting. The fundamental and macroeconomic background has not become any more favorable for the dollar recently to expect a stronger recovery. Thus, as before, we remain focused upward. Any news about escalation of the trade war, de-escalation of the Ukraine conflict, or Trump's pressure on the Fed will mean potential new declines for the U.S. currency.

On Monday, GBP/USD may well continue its upward movement, but new signals are now needed. Today, such signals could be a rebound from the 1.3466–1.3475 area or a breakout of the 1.3518–1.3532 area.

On the 5-minute timeframe, trading can now be done at 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, 1.3518–1.3532, 1.3574–1.3590, 1.3643–1.3652, 1.3682, 1.3763. No important events are scheduled in the U.S. or the UK for Monday, nor for the rest of the week. As a result, volatility may decline again.

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.