Analysis of Tuesday's Trades:

1H Chart of the GBP/USD Pair

The GBP/USD pair traded fairly calmly on Tuesday until Donald Trump and then Iranian authorities announced a two-week truce, during which all strikes would cease, and the Strait of Hormuz would be opened. Naturally, this is positive news for the whole world, but not for the U.S. dollar, which has recently been rising predominantly on geopolitical factors. We have mentioned multiple times that there are simply no other reasons for the dollar to appreciate. As soon as the geopolitical conflict entered a phase of de-escalation, the dollar immediately began to fall. If the market recalls the recent wave of disappointing data from across the ocean, the dollar could quickly return to its January levels. For now, the descending trend line has been breached, so the British currency will likely be in an upward trend in the near future. However, the dynamics of the currency pair will still primarily depend on geopolitical developments.

5M Chart of the GBP/USD Pair

On the 5-minute time frame, a multitude of trading signals were generated throughout the day on Tuesday, but the most interesting movements happened on Wednesday night. If any beginner traders were trading at night, they could have made a decent profit. However, throughout Tuesday, almost all trading signals proved false. Traders could only capitalize on the first two signals around the area of 1.3259-1.3267 and ignored the rest.

How to Trade on Wednesday:

On the hourly time frame, the GBP/USD pair has begun to form a new upward trend, but the British pound's growth will depend entirely on the degree of de-escalation in the Middle East. There are no global grounds for medium-term dollar growth, so in 2026, we expect the resumption of the global upward trend of 2025. However, for this to occur, geopolitical tensions worldwide need to continue declining, as at the moment the dollar is in demand solely on geopolitical grounds.

On Wednesday, beginner traders may open new short positions if the price bounces off the 1.3403-1.3407 area, with a target of 1.3319-1.3331. A consolidation above the 1.3403-1.3407 area will allow opening long positions with targets at 1.3437-1.3446 and 1.3484-1.3489.

On the 5-minute time frame, trading can currently be done at the levels of 1.3096-1.3107, 1.3175-1.3180, 1.3259-1.3267, 1.3319-1.3331, 1.3403-1.3407, 1.3437-1.3446, 1.3484-1.3489, 1.3529-1.3543, 1.3643-1.3652, 1.3695, 1.3741-1.3751. Today, there are no major events planned in the UK, while in the U.S., only the minutes from the last FOMC meeting will be released. We have no doubt the minutes will be ignored, and the market may continue to work out the truce between Iran and the U.S. for much of the day.

Key Principles of the Trading System:

1. The strength of the signal is determined by the time it took to form the signal (bounce or level breakthrough). The shorter the time, the stronger the signal.
2. If two or more trades were opened around any level based on false signals, all subsequent signals from that level should be ignored.
3. In a range, any pair can generate a lot of false signals or may not generate them at all. Technical levels may be ignored.
4. On the hourly timeframe, it is advisable to trade MACD signals only when volatility is good, and the trend is confirmed by a trendline or trend channel.
5. If two levels are located too close together (5-20 pips apart), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be set to breakeven.

What to Look for on the Charts:

Price levels of support and resistance are levels that serve as targets when opening buys or sells. Take Profit levels can be placed around them.

Red lines represent channels or trend lines that show the current trend and indicate the direction in which it is preferable to trade now.

The MACD indicator (14,22,3) – the histogram and the signal line – is a supporting indicator that can also be used as a source of signals.

Important speeches and reports (always included in the news calendar) can significantly affect the movement of the currency pair. Therefore, during their release, trading should be done with utmost caution, or traders should exit the market to avoid sharp price reversals against the previous movement.

Beginning traders in the forex market should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success.