Analysis of Tuesday's Trades

1H Chart of GBP/USD

On Tuesday, the GBP/USD pair remained stagnant for the second consecutive day. Market volatility is currently at a minimum, preventing the pound from moving significantly in either direction. Although the short-term uptrend on the hourly timeframe is still intact, the pound lacks strong fundamental reasons for further growth. Overall, the upward movement appears to be part of a corrective phase on the daily timeframe.

Yesterday, there were formal reasons to buy the British pound again. The UK labor market reports were not only "better than expected" but also "favorable for the British currency." Unemployment remained unchanged despite forecasts, and wage growth accelerated beyond expectations. This could lead the Bank of England to consider easing monetary policy at a slower pace in 2025. However, there are still no strong reasons for optimism.

Later today, within the hour, the UK inflation report will be released, which could trigger a decline in the pound.

5M Chart of GBP/USD

On Tuesday, two relatively weak sell signals were generated near the 1.2613 level in the 5-minute timeframe. Novice traders could have acted on these signals, but the downward movement was minimal in both cases, which was in line with the overall low volatility during the day. Nonetheless, the price did move slightly downward, ensuring that there were no losses from these trades.

Trading Strategy for Wednesday:

On the hourly timeframe, GBP/USD may begin a short-term downtrend. However, all price movements in recent weeks have been part of a correction on the daily timeframe. In the medium term, we strongly anticipate a decline in the pound toward 1.1800, which we believe is the most logical scenario. Now we just need to wait for the daily timeframe's upward correction to end.

On Wednesday, GBP/USD may initiate a new downward wave after six consecutive days of growth, followed by two days of stagnation. However, the short-term uptrend remains intact for now.

For the 5-minute timeframe, the key trading levels to consider are 1.2010, 1.2052, 1.2089-1.2107, 1.2164-1.2170, 1.2241-1.2270, 1.2301, 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.

The UK inflation report scheduled for release on Wednesday is a significant market event that could substantially impact GBP/USD. In the U.S., building permits data and the FOMC meeting minutes will be released later in the evening, but these are considered secondary events with less impact.

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.