Analysis of Friday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair showed very complex movements on Friday. We believe that they were due to the fact that the pair almost reached a price parity of 1.0000 during the day. The euro has not been at current price levels for 20 years, so there are very few levels in this area where you can trade, and the movements themselves have become sharp and difficult to predict. We believe that within the next week the pair may reach price parity, which will be a historic event. Unfortunately for the euro, the fundamental or macroeconomic background does not change at all, so it is still difficult to count on its growth. For example, a strong NonFarm Payrolls report was released in America on Friday, which showed the creation of 372,000 new jobs outside the agricultural sector. Forecasts predicted 268-300,000. The unemployment rate remained unchanged at 3.6%, while wages rose in line with the forecast by 0.3% M/M. Thus, the entire package of statistics can be called positive for the dollar, but the dollar itself fell in price after its release. We warned that this could happen. The US currency was growing all week, so traders could work out a strong package of statistics in advance.
5M chart of the EUR/USD pair
There were quite a lot of trading signals on the 5-minute timeframe today. Take note that the levels of 1.0072 and 1.0190 are new levels and were not present on Friday. Thus, all trading signals were formed around the same 1.0162 level and their accuracy left much to be desired. The first two signals were still relatively good. The first one was false, but it was immediately covered by a strong sell signal, which did not have a target level, because there was not a single level below 1.0162 at all. The price went down 78 points after it was formed, and the trade had to be closed manually. Then another sell signal was formed already at the US trading session, but it was at this time that a package of statistics was released in the US and the "swing" began. The 1.0162 level was worked out four more times. Since Nonfarm proved to be stronger than forecasts, the buy signals should not be considered. It was possible to earn a couple of tens of points based on sell signals, but again, all transactions had to be closed manually.
How to trade on Monday:
The new downward trend continues on the 30-minute time frame, but there is still no trend line or channel. Thus, the euro may well continue to fall next week. Now it is generally difficult to imagine what can stop this process. On the 5-minute TF on Monday, it is recommended to trade at the levels of 1.0072, 1.0162-1.0190, 1.0235, 1.0277, 1.0354, 1.0383. When passing 15 points in the right direction, you should set Stop Loss to breakeven. There are no important reports or other events planned either in the European Union or in the US for Monday. Thus, the day will be completely empty. However, after the events of the current week, the pair may continue to trade in a volatile and trendy manner.
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.
