Trade review for Tuesday:

1H chart of the GBP/USD pair

On Tuesday, the GBP/USD pair continued its downward move in line with the prevailing downtrend. The trend line clearly shows the direction the market is focusing on right now. Several moderately important UK reports were published yesterday, but the market largely ignored them. This is visible even from overall volatility, which amounted to only about 40 pips. The unemployment rate, for example, came in at 4.9% versus forecasts of 5.0% — so the most important report printed better than expected. Nevertheless, the pound failed to show any meaningful rally. This indicates the market remains fully focused on the Federal Reserve meeting and expects monetary tightening. The Fed will likely raise the policy rate simply because the market has been pricing it in. Many experts note there was no urgent need to hike specifically in September; the dollar's rise is driven primarily by market expectations of Fed tightening.

5M chart of the GBP/USD pair

On the 5-minute timeframe on Tuesday, no trading signals were formed. Price traded around the 1.3456–1.3476 area during the day, testing it from time to time. Thus, a buy signal could be found if desired, but intraday movement was minimal.

How to trade on Wednesday:

On the hourly timeframe, the GBP/USD pair continues a downward corrective trend that may end soon. In our view, sterling should continue to rise in the medium term under most scenarios, but it is currently undergoing a correction. On the weekly timeframe, the move from the lower boundary of the sideways channel toward the upper boundary continues and may not yet be complete. Therefore, we expect the northbound impulse to resume.

On Wednesday, novice traders may consider short positions targeting 1.3380–1.3386 if price consolidates below 1.3456–1.3476. Open long positions targeting 1.3587–1.3598 if price bounces off the 1.3456–1.3476 area.

On the 5-minute timeframe, 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. On Wednesday, the UK will publish an important August inflation report that may strongly influence the Bank of England's stance tomorrow and for the rest of the year. In the U.S. today — the Fed meeting and remarks by Kevin Warsh.

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.