The GBP/USD pair spent the second trading day of the week in the same manner it was active on Monday. The price settled below the upward trend line on Monday, which in itself was a sell signal. But since the signal formed late in the evening, we recommended waiting for new sell signals instead. Now two of them have been formed. The first one was formed in the early morning (encircled by the first pair of circles). Since the MACD indicator managed to discharge to the zero level overnight, short positions should have been opened based on this signal. The approximate point of entry into the market is 1.3765. However, the price went down afterwards by only 20 points, which was enough to set Stop Loss to breakeven and protect yourself from possible losses on the deal. And just in time, since immediately after that the pound/dollar pair's quotes began to grow. The second sell signal was formed at point 1.3758 (indicated by the second pair of circles) and afterwards the price went down 53 points at the moment. Considering that we recommend closing deals at Take Profit when 40-50 points are passed, the second signal worked out with a bang and brought profit to novice traders. In general, the downward trend is maintained now, as the upward trend line has been overcome. Thus, we recommend considering short positions again tomorrow. By the way, overcoming the 1.3730 level could also be regarded as a sell signal, but by that time a short position had already been opened.
The trades on the 5-minute timeframe were quite difficult on Tuesday, but let's try to understand them. No positions should have certainly been opened during the overnight trading. The price started to move more actively in the morning and the pair tried to form the first signal around the 1.3755 level, which formed yesterday. However, the price went up by 20 points immediately after it surpassed the 1.3755 level, then it went down again. In general, this level was overcome several times within an hour, so there was no question of any clear rebound or breakthrough. No signal was generated here. It no longer made sense to consider this level in the future since it lost its relevance and power. Now we marked it with a dotted line so that it would not be confusing. But the 1.3730 level turned out to be quite strong and relevant. The pound/dollar pair rebounded off it once (this signal turned out to be false) during the US session, and then surpassed it. Unfortunately, both of these signals did not bring profit to novice traders, since neither bulls nor bears were successful after a rebound or breakthrough of this level. The first signal should have closed at -0 points. The second - to zero according to Stop Loss. Thus, the total profit of the day is reduced by 10 points. No significant reports during the day. We have marked the time using a tick on the chart as to when the report on US consumer confidence will be published. We can clearly see that there was no reaction to this report.
How to trade on Wednesday:
On Wednesday, we once again recommend trading in accordance with the downward trend that formed on the 30-minute timeframe. A report on GDP for the fourth quarter of 2020 in the second estimate will be published tomorrow in the UK, and if it differs from the first estimate (+ 1.0% q/q), then it is possible that the markets may react to this report. The same goes for the ADP report on changes in the number of employees in the US private sector. According to forecasts, the total number could grow by 500,000, which is a lot. Therefore, you should be very careful and cautious once this report is published. In general, you can also remain in short positions once the quote surpasses the 1.3730 level, but at that time a short deal was already opened, and later on it was closed. Therefore, tomorrow we will open new shorts if a strong signal from MACD is generated or if the price rebounds from the 1.3730 level from below. On the 5-minute timeframe, we recommend paying attention to the levels 1.3706, 1.3730 and 1.3779 tomorrow. Signals can also form around them. As before, Take Profit is set at a distance of 40-50 points on the 30-minute timeframe, on a 5-minute timeframe, the target is the nearest level. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven.
