How to Trade the GBP/USD Pair on September 26? Simple Tips and Trade Analysis for Beginners

[Ben Graham]

Thursday Trade Review:

1H Chart of GBP/USD

The GBP/USD pair also plunged on Thursday. Recall that the British pound had grounds for its latest downward move. We cannot say these reasons were unambiguous—many factors were interpreted by the market against the pound, though they could've been seen the other way around. However, on Thursday, the US GDP and durable goods orders reports could only be interpreted as favorable to the US dollar. Q2 GDP came in at +3.8%, while durable goods orders rose by 2.9%—in both cases, much stronger than forecasts. Thus, more positive reports triggered growth in the US currency, fully supporting the current downward trend, now reaffirmed by the trend line. However, it's worth remembering that quite specific events triggered the dollar's rise over the past week. The dollar will need more data in its favor for sustained growth. It's not ready for an independent trend.

5M Chart of GBP/USD

In the 5-minute time frame, Thursday saw a bounce from the 1.3466 level during the European session, which allowed short positions to be opened from the morning. At the start of the US session, the 1.3413–1.3421 area was easily broken, and by the end of the day, the pair reached the 1.3329–1.3331 zone. Thus, with just one short trade, even novice traders could have made around 120 pips from a relatively simple signal.

How to Trade on Friday:

On the hourly chart, the GBP/USD pair continues to form a new downward trend. As we've said, there are no grounds for a prolonged dollar rally, so in the medium term, we expect moves only northward. Recent developments in the UK and the US have indeed supported the US currency, and the dollar's appreciation was justified. But globally, the fundamental background still does not favor it.

On Friday, the GBP/USD pair could continue to fall—but this will require new data to support the decline. If the price breaches the 1.3329–1.3331 region, this will serve as a signal to open positions with a target at 1.3259. At present, the price has bounced from this zone twice, so longs targeting 1.3413–1.3421 are also relevant.

On the 5-minute time frame, you can trade by using 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 Friday, the UK calendar is empty, and in the US, only two reports are worth attention: the Core PCE Price Index and the University of Michigan Consumer Sentiment Index. In both cases, a market reaction should only be expected if the data deviates from forecasts.

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.

The material has been provided by InstaForex Company - www.instaforex.com