Analysis of Friday's Trades

1H Chart of GBP/USD

On Friday, the GBP/USD pair continued to trade with low volatility and a slight upward bias. Market movements remained weak, although the pound exhibited slightly higher volatility compared to the euro. There were no major macroeconomic reports or central bank speeches during this time. The price tested the 1.2502 level multiple times but failed to break through it, just as it could not surpass the 1.2613 level. This behavior suggests a classic "New Year flat."

5M Chart of GBP/USD

On the 5-minute timeframe, two strong trading signals emerged on Friday. Although the pair was in an overall flat trend on the hourly timeframe, it successfully tested the lower boundary of the horizontal channel before breaking through the 1.2547 level. As a result, novice traders could have opened long positions in the 1.2502–1.2508 range and then held these positions after the breakout above 1.2547. Traders could have closed their long positions at any point thereafter.

Trading Strategy for Monday:

On the hourly timeframe, the GBP/USD pair has completed its primary upward corrective phase and is currently in a flat range. In the medium term, we fully anticipate a decline in the pound, as this appears to be the most logical scenario. However, it's important to note that the pound sterling shows significant resistance against the U.S. dollar. Therefore, while a downward trend is expected, it's essential to rely on technical signals. The outcomes of the Bank of England and Federal Reserve meetings further support the likelihood of bearish movement.

On Monday, the GBP/USD pair might trade erratically or remain in the same flat range with low volatility.

On the 5-minute timeframe, trading decisions can be based on the following levels: 1.2387, 1.2445, 1.2502–1.2508, 1.2547, 1.2633, 1.2680–1.2685, 1.2723, 1.2791–1.2798, 1.2848–1.2860, 1.2913, and 1.2980–1.2993. There are no significant events or reports scheduled in the UK or the US for Monday that could affect trader sentiment or prompt active trading.

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.