Analysis of Thursday's Trades

1H Chart of GBP/USD

On Thursday, the GBP/USD pair exhibited low volatility and mostly moved sideways. This week has brought an unusual amount of notable reports from the UK, but what conclusions can we draw from them? The inflation rate has declined, which is bearish for the GBP since it may prompt the Bank of England to lower interest rates more quickly. Additionally, the UK economy showed slower growth than expected in November, essentially barely registering any growth at all. Industrial production, as is often the case, contracted once again, this time by 0.4%. Given these factors, it is difficult to see a basis for the pound to strengthen. We must also consider the rising inflation in the US, which diminishes the Federal Reserve's inclination to lower the key rate. Overall, it seems that the four most significant reports of the week suggest a potential continuation of the GBP/USD decline.

5M Chart of GBP/USD

On the 5-minute timeframe, only one sell signal was generated on Thursday, appearing late in the evening and lacking precision. By the middle of the U.S. trading session, the price approached the 1.2241-1.2270 zone but failed to break through. Although there wasn't a clear rebound, the currency pair still has the potential to continue its downward movement today, as the macroeconomic data continue to favor the dollar over the pound. A strong buy signal could have been established near the 1.2170 level; however, the price fell short by just 4 pips.

Trading Strategy for Friday:

On the hourly chart, GBP/USD is continuing its downward trend. In the medium term, we fully support the scenario of the pound falling toward 1.1800, as this appears to be the most logical outcome. Therefore, we expect further declines, but trading should be guided by technical signals. This week has only reinforced the case for a continued drop in the pound, with no obstacles standing in its way.

On Friday, GBP/USD may experience calm trading, and macroeconomic data is unlikely to enable the pair to overcome the resistance zone between 1.2241 and 1.2270. As a result, a further decline seems more likely.

On the 5-minute timeframe, trading opportunities can be found at the following levels: 1.2010, 1.2052, 1.2089-1.2107, 1.2164-1.2170, 1.2241-1.2270, 1.2316, 1.2372-1.2387, 1.2445, 1.2502-1.2508, 1.2547, 1.2633, 1.2680-1.2685, 1.2723, and 1.2791-1.2798. On Friday, the UK will release its retail sales report, which is unlikely to have a significant impact on the pound. In the U.S., two relatively minor reports on industrial production and approved building permits will be released.

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.