Analysis of Monday's Trades

1H Chart of GBP/USD

On Monday, the GBP/USD pair exhibited movements nearly identical to those of the EUR/USD pair. This suggests that the US dollar has entered a new phase of weakening across the market. Both currency pairs consolidated above their descending trendlines, signaling the end of the downward trend. In both cases, the dollar's strength over the past three weeks was driven purely by technical reasons—mainly the need for periodic corrections. Now the market may start to recall all those fundamental factors that were working against the dollar but had not yet been reflected in price action.

Obviously, the dollar will not decline forever. There will be extended periods of correction or even local downward trends. However, until 2025, the US currency had been appreciating for 16 years. And we know that global trends change just like local ones. If we are currently at the beginning of a new trend, the dollar may continue to fall for quite some time. For the market, the trade war remains the most important factor—and there is still no positive news on that front.

5M Chart of GBP/USD

On the 5-minute timeframe, several decent trading signals were formed on Monday. At the very beginning of the European session, the price rebounded from the 1.3413–1.3421 area, leading to a relatively strong upward move. Unfortunately, the price stopped near the 1.3466 level and even generated a sell signal. As a result, long positions had to be closed, and the shorts generated no profit. However, the next buy signal near the same level allowed for reopening long positions, which turned out to be profitable. Ultimately, two out of three trades were successful.

Trading Strategy for Tuesday:

On the hourly timeframe, the GBP/USD pair shows readiness to form a new local upward trend. The price has consolidated above the descending trendline, indicating a potential rise in the coming weeks. Moreover, the fundamental background continues to work against the US dollar.

On Tuesday, the GBP/USD pair may continue moving upward toward the 1.3525 level. It is quite common for the price to retrace slightly after breaking through a trendline and then resume the new trend.

On the 5-minute timeframe, you can trade based on the following levels: 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3413–1.3421, 1.3466, 1.3518–1.3525, 1.3574–1.3590, 1.3643–1.3652, 1.3682, 1.3763, 1.3814–1.3832.

On Tuesday, the only noteworthy event is Jerome Powell's speech. Of course, one should not forget that Donald Trump may provoke a new "market storm" at any moment.

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.