Analysis of Thursday's Trades

1H Chart of GBP/USD

On Thursday, the GBP/USD pair once again plummeted, but this time the drop in the British currency lasted only five minutes. The reasons for the U.S. dollar's strength on Thursday were much more significant than on Wednesday. Yet, by the end of Thursday, the dollar had not gained even a single point.

To recall, many analysts on Wednesday speculated that the British currency had crashed by 200 pips because UK Chancellor Rachel Reeves broke down in tears during a debate in Parliament. Many tied those tears to criticism of the government and a potential resignation of the head of the Treasury. However, Prime Minister Keir Starmer almost immediately dispelled all concerns, stating that he fully trusts Reeves and holds her work in high regard.

Meanwhile, on Thursday, despite three of the most important U.S. economic reports showing strong figures and the dollar initially rising, it lost even more ground by the end of the day, with no apparent reason. Once again, we can conclude that the market refuses to buy the dollar under any circumstances, and any pullback is just used as a buying opportunity for the pound.

5M Chart of GBP/USD

On the 5-minute timeframe, the pair traded mostly within the 1.3643–1.3682 range on Thursday, exhibiting a flat movement. Only one trading signal was truly noteworthy — a bounce from the 1.3580–1.3592 zone. After that bounce, the price returned to the flat range, where it made sense to lock in profit from long positions.

Trading Strategy for Friday:

In the hourly timeframe, GBP/USD saw a sharp drop, but we do not believe this marks the beginning of a "dollar trend." The market still either sells the dollar or waits for fresh negative news from overseas to sell it again. This behavior will likely continue until the market sees tangible signs of the trade war ending, or until Donald Trump stops making decisions that exceed his authority, leaving market participants stunned.

On Friday, the GBP/USD pair may trade with low volatility, as the United States observes a public holiday today. A new ascending trendline has formed on the hourly chart, once again supporting the pound's growth.

On the 5-minute timeframe, trading can be done using the following levels: 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3413–1.3421, 1.3518–1.3535, 1.3580–1.3592, 1.3643–1.3652, 1.3682, 1.3763, 1.3814–1.3832. No significant events or releases are scheduled in either the UK or the US on Friday, so there will be little for traders to react to during the day.

Core Trading System Rules:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 20 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.

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