Trade Review for Thursday:

1H chart of the GBP/USD pair

The GBP/USD pair remained within the upward channel on the hourly TF on Thursday, but movement was extremely weak. Pound sterling retains an upward bias, but it is struggling to advance further. We cannot say there are no grounds for this. This week, for example, the US inflation report was released, which showed a second consecutive slowdown (albeit within forecasts). Slowing inflation means the Federal Reserve has fewer reasons to tighten monetary policy, especially given the dire state of the labor market. However, traders were not particularly impressed by the slowdown in consumer prices, as they expect the indicator to rise in August amid higher energy prices, particularly oil, to $90. In July, Brent fell to $70 per barrel. The conflict in the Middle East persists, and Tehran and Washington do nothing but bombard each other with new demands and ultimatums. We see no desire to end the conflict. Thursday's macroeconomic data in the UK did not support the pound.

5M chart of the GBP/USD pair

On the 5-minute TF on Thursday, a buy signal was formed. The price bounced during the European session from the area 1.3456–1.3476 and moved up a "whole" 25 pips. It, of course, did not reach the nearest target. Volatility remains extremely low.

How to trade on Friday:

On the hourly TF, the GBP/USD pair maintains an upward trend. In our view, the pound sterling should continue to rise, even if local factors do not support it. On the weekly TF, the movement from the lower boundary of the sideways channel toward the upper continues. And that movement is not finished. Market belief in a Fed key rate hike in September is melting before our eyes; the latest US macro data have all been weak. Only a consolidation below the upward channel on the hourly TF would allow the dollar to count on growth.

On Friday, novice traders can open short positions if there is consolidation below the area 1.3456–1.3476, with the target 1.3380–1.3386. Long positions can be opened with targets of 1.3587–1.3598 if the price bounces again from the area of 1.3456–1.3476.

On the 5-minute TF, you can now trade at the levels 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 Friday, there are no important events scheduled in the UK, and in the US, less important reports on retail sales and consumer sentiment will be released. Therefore, we do not expect strong market movements today.

Main Rules of the Trading System:

1. The strength of the signal is assessed based on the time it took to form (bounce or level breakthrough). The less time required, the stronger the signal.
2. If two or more trades are opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can generate a plethora of false signals or none at all. Technical levels may be disregarded.
4. When trading based on MACD signals on the hourly timeframe, it is advisable to do so only when volatility is high and a trend line or channel supports the trend.
5. If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.
6. After a 15-pip move in the correct direction, a Stop Loss should be set to break even.

What the Charts Show:

Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.

Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.

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

Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.

Beginners in Forex trading should remember that not every trade can be profitable. Developing a clear strategy and proper money management are essential for long-term trading success.