04.11.202401:03 Forex Analysis & Reviews: How to Trade the GBP/USD Pair on November 4? Simple Tips and Trade Analysis for Beginners

Analysis of Friday's Trades:

1H Chart of GBP/USD Pair

On Friday, the GBP/USD pair traded with an upward bias, which was more logical, but it still fell by the end of the day. While the euro showed a clear correction, the pound maintained a clear downtrend. Only on Thursday did the price break through its last local low. The NonFarm Payrolls and ISM reports from the U.S. put pressure on the U.S. dollar but did not depreciate significantly. We have previously warned that the British currency should continue to decline in the medium term, as all factors contributing to its growth have already been priced in. The market understands that the Bank of England will not remain on the sidelines long and will lower its key rate. Since it has done so only once, it will likely cut rates more aggressively than the Federal Reserve or the European Central Bank. Thus, we believe the British currency has significant room for further decline.

5M Chart of GBP/USD Pair

Two decent trading signals were formed on Friday in the 5-minute timeframe. First, the price struggled to break through the 1.2913 level, but entering a trade 10 minutes before the release of U.S. labor market data was risky. Later, the price bounced off the 1.2980 level, which could have been attempted for trading. By the end of the day, the pair managed to return to the 1.2913 level.

How to Trade on Monday:

In the hourly time frame, the GBP/USD pair made significant efforts to start a correction after a month of decline, but it has been unsuccessful. We fully support the pound's decline in the medium term, as we believe it is the only logical outcome. Soon, the pound may attempt another correction, but it will need macroeconomic and statistical support. This past week showed that such support is limited, and even when present, the pound has struggled to rise.

On Monday, novice traders can trade from the 1.2913 level.

On the 5-minute timeframe, trading can be done around the levels of 1.2791-1.2798, 1.2848-1.2860, 1.2913, 1.2980-1.2993, 1.3043, 1.3102-1.3107, 1.3145-1.3167, 1.3225, 1.3272, and 1.3365. No significant events are scheduled on Monday in the UK or the U.S., so we can likely expect dull trading with sluggish price movements.

Basic Trading System Rules:

1. The strength of a signal is determined by the time it takes to form (whether a bounce or breakthrough of a level). The quicker the formation, the stronger the signal.
2. If two or more trades have been made near a level due to false signals, any further signals from that level should be ignored.
3. In a flat market, a pair can generate many false signals or none at all. In any case, it's best to stop trading at the first signs of a flat market.
4. Trading occurs between the start of the European and middle of the US sessions, after which all trades should be manually closed.
5. On the hourly time frame, it's recommended to trade MACD indicator signals only when there is good volatility and a trendline or trend channel confirms a trend.
6. If two levels are too close together (5 to 20 pips apart), they should be treated as support or resistance areas.
7. After the price moves 20 pips in the intended direction, set the Stop Loss to breakeven.

What's on the Charts:

Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed around these areas.

Red Lines: Channels or trend lines that indicate the current trend and the preferred trading direction.

MACD Indicator (14,22,3): Histogram and signal line—an auxiliary indicator that can also be used as a source of signals.

Major speeches and reports (always found in the news calendar) can significantly impact currency pair movements. Therefore, it's advised to trade cautiously or exit the market during their release to avoid sharp price reversals against prior movements.

Beginners trading on the forex market should remember that not every trade will be profitable. A clear strategy and money management are the keys to success in long-term trading.