Analyzing trades on Monday:
EUR/USD on 30M chart
EUR/USD continued to trade flat on Monday although volatility had slightly increased compared to Friday. Yet, it was still very low. There were just 40 pips between the high and the low, which is not enough. Moreover, a flat movement was observed throughout the day which is not surprising amid such volatility. Thus, on Monday, the pair continued its trend from Friday with the lowest volatility in 2022. There were no publications or important events either in the US or in the EU. Therefore, there was nothing to pay attention to during the day, and there was nothing for the market to react to. Even the geopolitical background was quiet. Occasionally, there are reports about some military actions from this or that side but the forex market downplays this news. Market participants seem to be more interested in global events that are very few now. Besides, there is no trend line on the 30-minute chart. Only one thing is certain today – the pair is moving down.
EUR/USD on 5M chart
On the 5-minute time frame, the technical picture has not changed since Friday and represents a clear low-volatility flat movement. There was no strong movement on Monday. The pair had broken through an important strong level of 1.0806 several times. It is good that the first breakouts happened at night when traders could not follow them. Therefore, the first sell signal was formed only at the beginning of the North American session. Yet, it turned out to be false and weak. By the start of the session, traders could already see that there would be no movements on Monday. At that time, volatility was less than 40 pips, and there was no trend movement. Therefore, this signal could have been disregarded. No other trading signals were formed during the day.
Trading tips on Tuesday:
On the 30-minute time frame, the downtrend is still in place. There is still no trend line or trend channel, so all we can do is wait for new declines of the pair. Actually, it continues to trade near its 15-month lows and is likely to fall further as the geopolitical, fundamental, and macroeconomic backgrounds are very unfavorable for the European currency. On the 5-minute chart on Tuesday, it is recommended to trade at the levels of 1.0727, 1.0758, 1.0806, 1.0837, 1.0905, 1.0938, and 1.0966. You should set a Stop Loss to breakeven as soon as the price passes 15 pips in the right direction. On Tuesday, no important events and reports are scheduled either in the European Union or the United States. Thus, we do not expect any high volatility or strong trend movement. However, we should keep in mind that the military conflict in Ukraine can move the markets at any moment. We need to be ready for this. If the pair stays in the flat channel on Tuesday, it is better to refrain from trading.
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.
