Trade review of Wednesday:

1H chart of the GBP/USD pair

GBP/USD continued a very subdued upward drift on Wednesday with minimal volatility. No important reports or events in the UK or the US during the day, so traders again had little to react to. To be fair, the market has ignored many releases for months and focused only on the most important events — typically those tied to Federal Reserve policy. This week the major focus remains Friday's US inflation report. Today the European Central Bank announces its decision in the eurozone, but even a rate hike (priced in for weeks) does not guarantee strong intraday moves for the euro or the pound. As noted before: in recent months, the market has largely focused on Fed policy and major global events. Given the technical picture across timeframes and the global fundamental backdrop, sterling still has good medium-term upside prospects.

5M chart of the GBP/USD pair

On the 5-minute TF on Wednesday, price traded more sideways than up or down, so no trading signals were generated. Novice traders had no good grounds to open positions.

How to trade on Thursday:

On the hourly TF, GBP/USD continues a downward corrective trend that may finish soon. We believe sterling should continue to rise in the medium term under most scenarios, but it is in correction now. On the weekly TF, the move from the lower boundary of the sideways channel toward the top continues and may not be complete. Thus, we expect a resumption of the upward impulse.

On Thursday, novice traders may consider short positions targeting 1.3456–1.3476 if price bounces from 1.3587–1.3598. Long positions can be opened with targets at 1.3587–1.3598 in the event of a bounce from 1.3456–1.3476.

On the 5-minute TF, you can trade the levels 1.3259–1.3267, 1.3319–1.3331, 1.3380–1.3386, 1.3456–1.3476, 1.3587–1.3598, 1.3631–1.3641, 1.3695, 1.3741. No major UK or US events are scheduled for Thursday; the market is likely to ignore US weekly jobless claims and new-home sales data. The ECB decision is the only event that could theoretically move the pound off its current footing today.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are too close together (within 5-20 pips), treat them as a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance serve as targets for opening buy or sell trades or as sources of signals.

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

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also provide signals.

Important speeches and reports (listed in the news calendar) can significantly influence currency pair movements. Therefore, during their release, traders should approach trading with utmost caution, or exit the market to avoid sudden reversals against the preceding move.

Beginner forex traders 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.