Trade Review for Tuesday:

1-Hour Chart of GBP/USD

On Tuesday, the GBP/USD pair continued its slow, downward drift for most of the day. While the British pound has been falling more moderately compared to the euro in recent sessions, both moves appear illogical and lack clear fundamental backing. The recent mild strengthening of the U.S. dollar can be explained only by technical factors. It's important to recall that both the euro and the pound are trading within well-defined sideways ranges on the daily timeframe, which allows for arbitrary, random price moves within those bounds. On the hourly chart, the pair appeared to initiate a new upward trend, which may now be undergoing a technical pullback.

Starting today, traders will begin to receive impactful macroeconomic updates, which may affect market sentiment, although it remains difficult to predict how traders will respond in advance. Our view remains that global macro fundamentals continue to support the euro and the pound over the dollar.

5-Minute Chart of GBP/USD

On the 5-minute chart, a single sell signal was generated on Tuesday, just like in EUR/USD—during the overnight session. Traders who acted on the signal had the opportunity to gain around 35 pips. However, movements in GBP/USD remain erratic and low in volatility, something that all traders should keep in mind.

How to Trade on Wednesday:

On the hourly chart, GBP/USD appears to be forming a new bullish trend, which may become the next upward leg in the broader 2025 rally. As noted before, there are currently no sustainable macroeconomic reasons supporting long-term strength in the U.S. dollar. Therefore, over the mid-term horizon, we expect continued gains toward the upside. Still, market volatility remains extremely low, and the pair has yet to show any momentum to the upside.

On Wednesday, the pair may attempt to resume its upward movement, as the trend structure has shifted to bullish. However, to initiate long positions, the price must first consolidate above the 1.3413–1.3421 zone. Alternatively, bullish entries may follow a rebound from the 1.3329–1.3331 area, though this setup implies a continuation of current bearish pressure before potential reversal.

On the 5-minute chart, you can now trade at levels 1.3102-1.3107, 1.3203-1.3211, 1.3259, 1.3329-1.3331, 1.3413-1.3421, 1.3466-1.3475, 1.3529-1.3543, 1.3574-1.3590, 1.3643-1.3652, 1.3682, and 1.3763. On Wednesday, the UK will release its September consumer inflation report—one of the first meaningful economic releases of the week. This report could trigger sharp market reactions. Inflation in the United Kingdom has been rising steadily for a year now, and the Bank of England is unlikely to lower interest rates in the near term. This remains a fundamentally positive factor for the pound.

Core Trading System Rules

1. The strength of any signal is determined by how quickly it forms (breakout or rebound). The faster it forms, the stronger the signal.
2. If two or more false trades have occurred near a level, all subsequent signals from that level should be ignored.
3. During flat markets, any pair may generate many false signals—or fail to generate any at all. In these scenarios, it's better to suspend trading when the flat is confirmed.
4. Trades should be executed between the beginning of the European session and the midpoint of the U.S. session. All open positions should be manually closed afterward.
5. On the 1-hour chart, MACD-based trades should only be executed when good volatility and a clear trend are present, preferably confirmed by a visible trendline or channel.
6. If two levels are located too close together (5–20 pips), treat them as a support/resistance area rather than individual levels.
7. Once a trade moves 20 pips in your favor, the Stop Loss should be moved to breakeven to protect capital.

What's on the Chart?

• Support and resistance levels represent key price zones, often suitable for placing Take Profit orders.
• Red lines indicate trendlines or trend channels and denote the current market direction.
• The MACD (14,22,3) indicator and its histogram/signal line serve as a useful tool for confirming entries.
• Murray levels can help estimate the range or limits of trend and correction phases.
• Volatility levels (red horizontal lines) define the probable price range based on recent price action.
• The CCI indicator provides reversal signals when entering overbought (above +250) or oversold (below -250) zones.

Important Note for Beginners

Trading during major news events (as listed on the calendar) can significantly impact price movement. During such times, trade cautiously or step out of the market entirely to avoid a sharp reversal against your position.

Beginners must remember that not every trade can be profitable. The key to long-term success in forex is maintaining a consistent strategy, reinforcing discipline, controlling risk, and following sound money management principles.