Tuesday's Trade Analysis:

1H Chart of the GBP/USD Pair

The GBP/USD pair showed good growth on Tuesday, fueled by the U.S. inflation report, which unexpectedly came in lower than forecasts. As a result, the British currency received market support, but the upward trend line had previously been breached, so the pound may still be inclined to decline in the near term. Moreover, there are not many important events remaining this week, and the market is hardly interested in geopolitics anymore. Thus, in the remaining days of the week, we may observe more technical movements. It is worth reminding that even if the Federal Reserve raises the key rate by the end of the year, the market has already priced in this event in June. We believe there are no longer grounds for mid-term dollar growth. Of course, geopolitics could influence market sentiment, but currently, there are no reasons for such shifts.

5M Chart of the GBP/USD Pair

On the 5-minute timeframe, two trading signals were generated on Tuesday. Initially, the pair bounced from the 1.3380-1.3386 area, and just an hour later, it breached it. The first signal turned out to be false, and the second was extremely challenging to trade, as the price shot up by 50 pips in just 5 minutes. Thus, Tuesday was not the best day for trading.

How to Trade on Wednesday:

On the hourly timeframe, the GBP/USD pair may begin a new downward trend or at least a correction. The conflict in the Middle East is on pause, but Iran and the U.S. are speeding toward long-term confrontation. Therefore, even if the dollar does not show a new trend, it will become much harder for the British pound and euro to rise in the near term. At the same time, expectations for the Fed's tightening monetary policy are starting to wane, which could support the euro and pound. We are currently anticipating a correction.

On Wednesday, novice traders may open short positions if the price consolidates below the 1.3380-1.3386 area, targeting 1.3319-1.3331. A price bounce from the 1.3380-1.3386 area would allow for opening long positions targeting 1.3456-1.3476.

On the 5-minute timeframe, the following levels can be considered for trading: 1.3043, 1.3096-1.3107, 1.3175-1.3180, 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3456-1.3476, 1.3587-1.3598, 1.3631-1.3641, and 1.3695. On Wednesday, there are no important events scheduled in the UK, while in the U.S., Kevin Warsh's speech and the Producer Price Index will be released. We do not consider these events significant.

Basic Rules of the Trading System:

1. The strength of a signal is determined by the time required to form it (a bounce or a breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a particular level based on false signals, subsequent signals from that level should be ignored.
3. In a flat market, any pair may form many false signals or none at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be executed only when volatility is good, and a trend is confirmed by a trend line or channel.
5. If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be set at breakeven.

What's on the Charts:

Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.

Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.

The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.

Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.