The GBP/USD pair continued its downward movement on Wednesday after it settled below the rising channel. During the day, quotes fell to the level of 1.3729 and rebounded from it. This signal should be considered as a buy signal and it should be rejected. However, a similar signal was formed on the 5-minute timeframe, so we will analyze it below. Here I would like to say that the pound/dollar pair has fallen ill with the euro/dollar pair and has shown very weak volatility lately. 70 points a day seems to be a lot, but this is not enough for the pound/dollar pair, which normally goes through 100-130 points per day. Now we can't even dream of such values. There was one important event during the day. Bank of England Governor Andrew Bailey and several representatives of the BoE Monetary Committee spoke at the Treasury. And it was at this time that the strongest movement of the day occurred. Thus, we can conclude that the markets have worked out this event. In general, the trend is now downward, but traders need to overcome the level of 1.3729 in order to continue moving down.
Several trading signals, and even strong ones, were formed at once on the 5-minute timeframe on Wednesday. Almost all signals were generated around the 1.3771 level, which is the previous day's low. Novice traders can easily find and build it themselves. The first sell signal was formed at the very beginning of the European session, when the price settled below the level of 1.3771. At this point, short positions should have been opened. Subsequently, the price returned to this level two more times, each time bouncing off it. Since the price did not manage to pass 20 points down after the formation of the first signal, each time it returned to the level of 1.3771, one should simply remain in the short position, without opening new deals. As a result, beginners were still rewarded for their patience, as the downward movement intensified in the US session, and the price reached the level of 1.3729. Closer to 15-00 GMT, Stop Loss should have been set to breakeven, as the time for Bailey's speech was approaching (ticked off). Around 1.3729, a profit of 22 points should have been taken. And also immediately open long positions on the signal of a rebound from the level of 1.3729. As a result, the price once again returned to the level of 1.3771 and overcame it, where it was necessary to manually close the longs with a profit of 35 points. Thus, today we managed to earn a total of about 57 points.
How to trade on Wednesday:
At this time, the pound/dollar pair has left the rising channel on the 30-minute timeframe, so it is recommended to consider sell signals. Unfortunately, the volatility for the pair has also decreased, so you should be very careful with the signals from the MACD indicator or ignore them. The important levels on the 5-minute timeframe are 1.3729, 1.3771, 1.3796, 1.3816, 1.3855. We recommend trading with them. The price can bounce off them or overcome them. As before, we set Take Profit at a distance of 40-50 points. At the 5M TF, you can use all the nearest levels as targets, but then you need to take profit, taking into account the strength of the movement. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven. There are no important events scheduled for Thursday in the UK and the US, so traders will have nothing to work out during the day. Trade will have to be conducted exclusively on technique.
