FX.co ★ How to trade EUR/USD on April 5, 2022. Simple trading tips and analysis for beginners

Analyzing trades on Monday:

EUR/USD on 30M chart

EUR/USD was trading in a downtrend on Monday which was much stronger than on Friday. By the way, on Friday, both the European Union and the United States published important macroeconomic data, which hardly caused any reaction in the market. On Monday, when the economic calendar in both countries was empty, the pair was slowly but showed a good intraday trend. At the beginning of the European trading session, the price moved down and was trading in the downtrend for the whole day. Perhaps, this was the way how traders reacted to the news from Friday. Or this could be a reaction to geopolitical events. Over the past few days, there has been several important news. Firstly, the Ukrainian military completely liberated the Kyiv region. Secondly, there were reports that Russian troops are moving to Donbas and will start fighting for the Luhansk and Donetsk regions in order to expand their borders. The second news suggests that the military conflict may escalate in the coming days, which, of course, does not increase the demand for risk currencies, but it increases the demand for the US dollar.

EUR/USD on 5M chart

On the 5-minute time frame, the trajectory on Monday was very good for traders. As I always say, it is nice to trade when there is a trend. Today, only one trading signal was formed (sell) after the formation of which the pair went down about 40 pips. Monday's volatility was still low, but thanks to the trend movement and the lack of pullbacks, novice traders could get these 40 pips in profit. The pair failed to reach the nearest target level, so the short position had to be closed manually in the late afternoon. Overall, that's all I can say about Monday's trading. The European currency has resumed its fall, but this is not surprising. I have mentioned several times that as long as the geopolitical conflict in Ukraine persists, the euro and the pound will remain in the risk zone. As you can see, the market still continues to get rid of the European currency, although in small volumes.

Trading tips on Tuesday

A new downtrend has been formed on the 30-minute time frame, but it is impossible to form a channel or a trendline now since at least two pivot points are missing. Thus, there is a trend, but there is no trend pattern. However, the European currency may continue to decline, at least to its local lows around 1.0944. There will be few macroeconomic events this week, so the main focus is on the geopolitical background and on a possible escalation of the conflict between Russia and Ukraine. On the 5-minute chart on Tuesday, it is recommended to trade at the levels of 1.0902, 1.0944, 1.0966, 1.1038, 1.1070, and 1.1132. You should place a Stop Loss to breakeven as soon as the price passes 15 pips in the right direction. On Tuesday, the EU and the US will publish the data on business activity in the services sector. The ISM index in the US is quite important, so theoretically it could cause a market reaction. However, on Friday, much more important reports were ignored. So, the market can downplay this data as well on Tuesday.

Basic rules of the trading system

1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.

2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.

3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.

4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours, when all positions must be closed manually.

5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.

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 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, and 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 patterns (channels and trendlines).

Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.