Trade review for Wednesday:

1H chart of the GBP/USD pair

The GBP/USD pair also collapsed on Wednesday, which is quite logical given the Federal Reserve's actual stance. All 12 members of the Federal Open Market Committee voted for tighter policy — something few on the market expected. At the press conference, Kevin Warsh said the Fed will bring inflation down to target, a tone sharply different from earlier comments. In short, Warsh signaled to markets that the September hike will not be the only one and will not be the last. That is why the dollar continued to gain even though the market had already priced in a September rate increase. We faced a situation where the fundamental backdrop changed dramatically within a few hours. Previously, we expected medium-term strength for the euro and pound because of the lack of dollar drivers; now everything has changed. If the Fed tightens as long as necessary to return inflation to target, that completely alters the outlook for the dollar.

5M chart of the GBP/USD pair

On the 5-minute timeframe on Wednesday, at least one sell signal was formed. During the US session, even before the Fed's results were published, the pair consolidated below the 1.3456–1.3476 area. Later, after the announcement, it bounced off that zone. Thus, novice traders had two opportunities to open short positions — the second one essentially guaranteed. Overnight, the pair also settled below the 1.3380–1.3386 area.

How to trade on Thursday:

On the hourly timeframe, the GBP/USD pair continues a downward trend that is becoming a full-fledged trend. The fundamental backdrop for the dollar and the pound changed sharply on Wednesday evening as the Fed signaled readiness to continue tightening. As a result, dollar positioning for 2026 has become materially more favorable again.

On Thursday, novice traders may consider short positions targeting 1.3319–1.3331 if price consolidates below the 1.3380–1.3386 area. Open long positions targeting 1.3456–1.3476 if price confirms a close above the 1.3380–1.3386 zone.

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. The Bank of England meeting is scheduled for Thursday in the UK, but it appears to carry little weight for traders now. The pound may recover a bit today, but meaningful sterling strength is unlikely at this stage.

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.