Analysis of Monday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair traded downwards again on Monday. There was not a single reason for a new decline for the euro, but does the market really need reasons to sell the pair now? There were no important reports or events on Monday and yet the pair again rushed down from the very evening. Perhaps, in this way, the market worked out the NonFarm Payrolls report, since the dollar fell after its release on Friday, not growth, which would have been much more reasonable. However, on Friday, the market decided to take some profits on short positions, so we saw the pair rise, not fall. But on Monday, the market remembered the Nonfarm report and rushed to buy the dollar with renewed vigor. As a result, by the end of the day, the euro renewed its 20-year lows once again. It is difficult to predict what will happen this week. The euro has been falling for a very long time and very sharply, which means that an upward correction can begin at any moment. At the same time, there will be practically no important events and reports this week, which seems to be favorable for a correction. And at the same time, Monday showed that the market is ready to sell even without statistics and foundation.
5M chart of the EUR/USD pair
There were few trading signals on the 5-minute timeframe on Monday. The strongest signal was formed at night, as the downward movement began at that time. However, at the opening of the European trading session, the pair moved away from a signal that was beginning to form by only 9 points, so it was possible to open a short position with some delay. Subsequently, the price fell by 100 points ("ordinary boring Monday") and overcame the level of 1.0072, which was the previous local low. However, after overcoming this level, it was no longer able to continue falling and it just settled above it. The short position should have been closed on this buy signal. But it was no longer necessary to work out the buy signal with a long position, since it was formed too late in time. As a result, only one trade could be opened on Monday.
How to trade on Tuesday:
The 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. Now it is generally difficult to imagine what can stop this process. This week, only the US inflation report can really greatly affect the movement of the euro/dollar pair. On the 5-minute TF on Tuesday, it is recommended to trade at the levels of 1.0072, 1.0162-1.0190, 1.0235, 1.0277. When passing 15 points in the right direction, you should set Stop Loss to breakeven. Neither the European Union nor the United States again scheduled any important publication or other event. Thus, the day will be completely empty. Nevertheless, the beginning of the new week has already made it clear that the pair can continue to move in a trendy and volatile 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 US 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.
