Trade review for Thursday:

1H chart of the GBP/USD pair

On Thursday, the GBP/USD pair also showed a small decline that didn't affect the overall technical picture or the local uptrend. Overall, sterling continues to rise steadily, supported by this week's macroeconomic backdrop. Recall that UK unemployment fell unexpectedly and inflation rose more than forecast. These two reports suggest the Bank of England may raise the key rate at its early November meeting. Therefore, in our view, the pound's rise is entirely justified. Also note that the technical picture on higher timeframes can continue to push the pound up. On the daily and weekly TFs, a flat persists, and about one and a half weeks ago the price bounced off the lower boundaries of two sideways channels and even formed deviations. Thus, sterling can continue to rise even without further fundamental macro support.

5M chart of the GBP/USD pair

On the 5-minute TF, three trade signals formed on Thursday. Overnight, price bounced off the 1.3380–1.3386 area but failed to develop an upward impulse. During the European session, it held below the 1.3380–1.3386 area but also failed to develop a downward impulse. Then it reclaimed the area above, which may develop further today.

How to trade on Friday:

On the hourly TF, GBP/USD continues to form a new uptrend. The pound has shown, and continues to show, greater resilience versus the dollar in recent weeks, so it now has a better chance of an upward trend. The technical picture on almost all charts supports sterling's rise. The fundamental and macro backdrop, along with the dollar's overbought condition, also supports GBP/USD's rise.

On Friday, novice traders can open new short positions targeting 1.3319–1.3331 if price holds below 1.3380–1.3386. Consider long positions targeting 1.3456–1.3476 if price bounces off the 1.3380–1.3386 area.

On the 5-minute TF you can trade the levels 1.3043, 1.3096–1.3107, 1.3175–1.3180, 1.3259–1.3267, 1.3319–1.3331, 1.3380–1.3386, 1.3456–1.3476, 1.3587–1.3598, 1.3631–1.3641. On Friday, the UK will publish business-activity indices and retail-sales data. These reports may prompt a morning market reaction. In the afternoon, the U.S. will release similar business-activity indices, which the market may ignore. But the U.S. trading session is traditionally more volatile than the European one.

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.