Analysis of previous deals:
30M chart of the EUR/USD pair
It cannot be said that the EUR/USD pair was trading strangely on Monday - but in a rather predictable way, if all factors are taken into account. Let's start with the technical ones. On Friday, the pair rose 120 points, showing extraordinary volatility that has rarely been seen in recent months. Considering that at the same time the pound sterling did not show anything of the kind, we conclude that the reason for such a strong growth in the euro lay not in the omicron strain and general panic. Considering the fact that there was no other strong and important fundamental and macroeconomic background on Friday, it turns out that we watched how market participants fix profits on short positions, which led to a fairly strong upward movement. Thus, on Monday we saw a simple pullback against the strong move on Friday. Nevertheless, even a weak uptrend line managed to form. However, it can be overcome tomorrow by analogy with the descending channel for the pound / dollar.
5M chart of the EUR/USD pair
The picture on the 5-minute timeframe was quite trivial on Monday. If by the 30-minute one we can say that the pair was correcting, that is, it was moving down, then on the 5-minute TF it is clearly seen that the quotes spent most of the day in the horizontal channel between the levels of 1.1259 and 1.1290, and the decline was observed only at night when most traders in our time zone were sleeping. Nevertheless, several trading signals were generated even in the flat. We marked them with rectangles in the chart above, although in fact more than three of them formed. There were at least five rebounds from the level of 1.1259 alone. However, these were the same type of bounces, which should not have led to the opening of five long positions. So, in order. The first rebound from the level of 1.1259 is a signal to buy and the pair's growth to the level of 1.1290. As a result, the profit on a long position is 12 points. A rebound from the level of 1.1290 was formed for several hours, but still formed, and after it the price dropped back to the level of 1.1259. Thus, this sell signal should have been worked out, and the profit on it was 13-15 points. Further, new long positions should have been opened, since several rebounds followed from the level of 1.1259, but this time the price could no longer start a new round of upward movement, so the last deal should have been closed manually in the late afternoon. The profit on it, most likely, amounted to 0 points.
How to trade on Tuesday:
The downward trend reversed on the 30-minute timeframe. So now the euro can continue rising for some time, but the movement is unlikely to be strong. However, as long as the upward trend line remains relevant, long positions remain appropriate. On the 5-minute timeframe, the key levels as of November 30 are 1.1192, 1.1231, 1.1259, 1.1290, 1.1321. Take-Profit, as before, is set at a distance of 30-40 points. Stop Loss - to breakeven when the price passes in the right direction by 15 points. At the 5M TF, the target can be the nearest level if it is not too close or too far away. If it is located - then you should act according to the situation or work according to Take-Profit. On Tuesday, we recommend that novice traders pay attention to the report on inflation in the European Union. It can cause a reaction from the market, and its actual value is unlikely to coincide with the forecast and the previous one. Janet Yellen and Jerome Powell will also give speeches tomorrow, which may slightly affect the mood of the markets.
Basic rules of the trading system:
1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.
2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.
3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.
4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.
5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
