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26.05.2025 07:57 AM
How to Trade the GBP/USD Pair on May 26? Simple Tips and Trade Analysis for Beginners

Analysis of Friday's Trades

1H Chart of GBP/USD

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The GBP/USD pair also showed a confident upward movement on Friday, driven by the overall uptrend observed over the past two weeks and fueled by Donald Trump's decision to raise tariffs on imports from the European Union to 50%. Thus, the dollar's fate on Friday was sealed. The U.S. currency could continue to fall for a long and painful stretch, as last week demonstrated no trade war de-escalation in sight. Trump merely granted a three-month "grace period" to the sanctioned countries so they could present him with an offer beneficial to the U.S. during that time. In essence, Trump has no intention of making any concessions himself. He still wants to impose tariffs on half the world in exchange for access to the U.S. market. Even the tariff reduction for China was not part of any de-escalation process — it was a move to save bilateral trade. Tariffs were adjusted to levels that at least make trade marginally feasible.

5M Chart of GBP/USD

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Only one trading signal was generated on Friday in the 5-minute timeframe, and it was very promising. At the start of the European trading session, the price bounced from the 1.3421–1.3443 area and, from there, moved in one direction for the rest of the day. By the end of the day, the 1.3537 level was reached, where profits could be taken. The gain amounted to approximately 70 pips.

Trading Strategy for Monday:

On the hourly timeframe, the GBP/USD pair continues to be driven solely by Donald Trump's actions and maintains a deeply skeptical outlook toward his policies. Let's recall: a trade deal between the U.S. and the U.K., as well as tariff reductions between the U.S. and China, are positives for the dollar, not the pound. A rate cut by the Bank of England and a steady rate by the Federal Reserve are positives for the dollar, not the pound. Yet, we're seeing the opposite reaction and movement. The market is ignoring 90% of dollar-positive factors.

On Monday, GBP/USD may continue to move higher. The market will once again look for any reason to sell the dollar—or simply wait for new headlines. Market conditions remain unchanged day after day.

On the 5-minute chart, trading can now be based on the following levels: 1.2848–1.2860, 1.2913, 1.2980–1.2993, 1.3043, 1.3102–1.3107, 1.3203–1.3211, 1.3259, 1.3329–1.3331, 1.3421–1.3443, 1.3537, 1.3580–1.3598. No significant events are scheduled in the U.K. or the U.S. for Monday, but let's not forget that Donald Trump could announce new tariffs at any moment — or make another high-impact decision.

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.

Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.

Paolo Greco,
Analytical expert of InstaForex
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