Analysis of Monday's Trades

1H Chart of GBP/USD

On Monday, the GBP/USD pair demonstrated significant growth. However, let's take a closer look at the hourly timeframe—can we conclude that the pound has started a strong correction? In our view, the answer is no. The upward movement of the British currency appears to be another weak correction that could end at any moment. This aligns with our expectations. We see no reasons for the pound to exhibit a prolonged medium-term rise. Events on Monday, including Donald Trump's inauguration, did not change this outlook. The new U.S. president made several important statements, such as "I will end all wars," but there's a notable difference between saying and doing. An ascending trendline has formed, which will now help us determine the end of this correction.

5M Chart of GBP/USD

On the 5-minute timeframe, several good trading signals were generated on Monday, thanks to the strong movement throughout the day. Initially, the pair bounced perfectly from the 1.2164-1.2170 area and then rose to the 1.2316 level. This single buy trade allowed traders to earn a solid profit. Further rebounds occurred at the 1.2316 and 1.2270 levels, which could also have been leveraged for additional gains. Several more signals formed overnight, but we did not consider those.

Trading Strategy for Tuesday:

On the hourly timeframe, the GBP/USD pair continues to exhibit a downward trend. In the medium term, we fully anticipate a decline in the pound towards the 1.1800 target, as this appears to be the most logical outcome. Therefore, we should expect only further declines; however, decisions must be based on technical signals. Currently, another correction is in progress, and the trendline will help us determine when this will end.

On Tuesday, the GBP/USD pair may trade more steadily and could potentially return to the ascending trendline.

For trading on the 5-minute timeframe, the following levels can be used: 1.2010, 1.2052, 1.2089-1.2107, 1.2164-1.2170, 1.2241-1.2270, 1.2316, 1.2372-1.2387, 1.2445, 1.2502-1.2508, 1.2547, 1.2633, 1.2680-1.2685, 1.2723, and 1.2791-1.2798. On Tuesday, the UK will release unemployment data, changes in the number of jobless claims, and changes in average earnings. In the U.S., no significant events are scheduled for today. We anticipate that the dollar may begin to recover today, as yesterday's decline was overly emotional.

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.