Analyzing Monday's trades:

GBP/USD on 30M chart

GBP/USD also tried to continue the upward movement on Monday, but failed to do so and went below the ascending trend line. Thus, formally, the uptrend in both major currency pairs has been reversed. If these are not false signals, both European currencies will start falling now. I believe that this is the most logical case scenario, but at the same time we have to admit that the market has not yet completely gotten rid of the urge to buy the euro and pound for no reason. This week, the comments of Federal Reserve officials are likely to play against the dollar as they might start to change their stance to more dovish after the release of the latest US inflation report. There were no important news and events on Monday, so we have to wait for the next few days when they will be present.

GBP/USD on M5 chart

Monday's trading signals were not the best, but you could still try to work them out. In the very beginning of the European trading session, the price crossed the 1.2245-1.2260 area, which should have been covered by a short position. Subsequently, the price fell below the 1.2186-1.2205 area, which was considered irrelevant on the day, and instead the 1.2171-1.2179 area was formed. However, after crossing this area, the price was unable to continue the downward movement and settled above it. At this point, we should have closed the short positions, with a profit of about 20 pips. Also, it was possible to open a long position here, but the buy signal turned out to be false, and the best thing that novice traders could do was to close the deal at zero since there was no sell signal before the end of the day. The position could be closed near 1.2205. In any case, the loss on it hardly exceeded 20 pips, so the day should have ended without any losses.

Trading tips on Tuesday:

GBP/USD can complete the upward movement on the 30-minute chart, since the trend line did not resist. I believe that crossing 1.2260 may lead to the idea of a false breakout of the trend line and cancel this signal. Without that I expect to see the pound fall again. On the 5-minute chart, it is recommended to trade at the levels 1.1950-1.1957, 1.2008, 1.2057-1.2079, 1.2109, 1.2171-1.2179, 1.2245-1.2260, 1.2337-1.2343. As soon as the price passes 20 pips in the right direction, you should set a Stop Loss to breakeven. Unemployment and payrolls are scheduled for release on Tuesday in the UK. These are not very important, but on an empty calendar they might just provoke a reaction. There will be nothing interesting in America on Tuesday.

Basic rules of the trading system:

1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.

2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.

3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.

4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.

5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.

On the chart:

Support and Resistance levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are channels or trend lines that display the current trend and show in which direction it is better to trade now.

The MACD indicator (14, 22, and 3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend patterns (channels and trendlines).

Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.