Analysis of Tuesday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair continued to fall on Tuesday, which began on Monday. And by the end of the trading day, it reached the level of 1.0000, that is, it reached price parity between the euro and the dollar. From our point of view, this is a historic event that eloquently shows how high the risks for the European economy are now due to the geopolitical conflict in Ukraine. It should also be noted that the aggressive monetary approach of the Federal Reserve is also of great importance for traders. One way or another, but the euro has fallen to its 20-year lows and now almost every day updates them. No important event or report either in the US or in the European Union on Tuesday either. However, as we can see, this absolutely does not prevent traders from selling the euro. The US inflation report will be published on Wednesday, which is rightfully considered the most important event of the week. The market reaction is bound to follow, but it is unlikely that it will greatly affect the current technical picture. The euro has entered a steep peak and can be in it for a very long time.
5M chart of the EUR/USD pair
There were few trading signals on the 5-minute timeframe on Tuesday. To be more precise, only one. The pair, out of habit, began to decline at night, but even then none of the levels worked out, so there were no signals. It is worth recalling that there are, in principle, very few levels at current price values, because the price has not fallen so low for 20 years. The 1.0000 level was formed during the day, but for obvious reasons it did not take part in today's trading. Thus, the first and only trading signal was formed when the level of 1.0072 was reached from below. More precisely, the price did not reach it by 2 points, but this is an acceptable error. The rebound of quotes from this level allowed novice traders to open a short position, but they did not manage to earn much on it - the pair managed to go down only 27 points. However, this was enough to put the Stop Loss at breakeven, so there definitely could not have been a loss on this trade. Novice players could even earn about 10 points, since the deal had to be closed manually in the late afternoon.
How to trade on Wednesday:
The new downward trend continues on the 30-minute time frame, but there is still no trend line or channel. Although the pair has returned to the 1.0072 level, only 60 points away from its 20-year lows. If the 1.0072 level is overcome, it will give at least some illusory hopes for a more significant growth of the euro. Without this, the quotes will resume to fall. On the 5-minute TF on Wednesday, it is recommended to trade at the levels of 1.0000, 1.0072, 1.0162-1.0190, 1.0235. When passing 15 points in the right direction, you should set Stop Loss to breakeven. The European Union will publish a report on industrial production, and the US with its report on inflation. Naturally, US inflation will have a much stronger meaning and the reaction to this report should follow. However, the trend movement and high volatility are present even without macroeconomic statistics.
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.
