Analysis of transactions of the environment:
30M chart of the EUR/USD pair.
The EUR/USD currency pair spent most of Wednesday inside the flat again. Although we fix a flat inside the day almost every day, in general, the pair continues to decline. Today, it came close to the level of 1.0806, but could not work it out or overcome it. Immediately after the second approach to this level, a strong upward movement began, which in total diverted the euro currency by 60 points from the lows of the day. Although, of course, to call 60 points a "strong correction", or at least just a "correction", or even a "rollback" clearly does not work. We saw just an unsuccessful attempt to overcome an important level. The departure of quotes to the top is a logical development of events. Today, there was not a single important event in the European Union or America during the day. It is unlikely that the producer price index could provoke a drop in the US currency by 60 points. This index derived from inflation reflects the same essence of what is happening: prices are rising and they are growing faster. Thus, even the exceeded forecasts for production prices could not shock traders in any way. We believe that today's movements were technical. The pair has already managed to go beyond the side channel, but we warned novice traders that it is quite formal, more for visualization, not for trading.
5M chart of the EUR/USD pair.
On a 5-minute timeframe, the movement during the day does not need any comments or explanations. In the Asian, European, and half of the American trading sessions, the pair was between the levels of 1.0806 and 1.0837 with small errors. Thus, novice traders saw not just a flat, but a low-volatility flat. And in the second half of the American session, there was an unexpected growth of the European currency, which was not provoked by the "foundation" or "macroeconomics". As it is easy to guess, all the trading signals of the day were formed around the same level of 1.0837, which is a sign of a flat. The first sell signal was formed when the rebound from this level, and the price could not go down even 15 points. However, the first three trading signals were sell signals. The price has never been fixed above the level of 1.0837, so only one short position should have been opened. On the third attempt, the pair still went down about 15 points, which allowed the Stop Loss to break even on the deal, at which it closed at the moment of overcoming the level of 1.0837. Probably, it was not necessary to work out a single buy signal, although this transaction could bring 10-20 points of profit. However, all trading signals before it was false, and the movement was a blatant flat.
How to trade on Thursday:
On the 30-minute timeframe, the trend remains downward. There is still no trend line or descending channel. The maximum that can be formed now is a short-term downward trend line (present in the illustration). However, there is no need to talk about its strength, since it encompasses movements in just three days. Even today, the pair can gain a foothold above it, which absolutely will not mean that now the euro currency will grow for at least a few days. On the 5-minute TF tomorrow, it is recommended to trade by levels 1.0727, 1.0806, 1.0837, 1.0905, 1.0938, and 1.0966. When passing 15 points in the right direction, you should set the Stop Loss to breakeven. The results of the ECB meeting will be summed up in the European Union on Thursday, and we would not even consider this event to be important right now. The rate will not be changed, and Christine Lagarde is unlikely to say anything new. However, at this time, you should still be careful with opening any positions. There will be one important report in America - retail sales for March.
Basic rules of the trading system:
1) The strength of the signal is calculated by the time it took to generate the signal (rebound or overcoming the level). The less time it took, the stronger the signal.
2) If two or more trades were opened near a certain level on false signals, 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 transactions are opened in the period between the beginning of the European session and the middle of the American session when all transactions must be closed manually.
5) On a 30-minute TF, signals from the MACD indicator can be traded 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 a support or resistance area.
What's on the charts:
Price support and resistance levels - the levels that are the targets when opening purchases or sales. Take Profit levels can be placed near them.
Red lines - channels or trend lines that display the current trend and show in which direction it is preferable to trade now.
MACD indicator (14, 22, 3) - a histogram and a signal line - an auxiliary indicator that can also be used as a signal source.
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 to avoid a sharp price reversal against the previous movement.
Forex beginners should remember that every trade cannot be profitable. The development of a clear strategy and money management are the keys to success in trading over a long period.
