Analysis of Friday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair continued its downward movement on Friday, no matter what. Recall that this week the euro seriously took up the task of updating its 20-year lows and fell almost without paying any attention to the fundamental and macroeconomic backgrounds. In other words, there were not so many negative events and reports for the euro that it lost more than 200 points. However, we have repeatedly talked about the ongoing long-term downward trend, and now there is a downtrend line on the 30-minute time frame as well. Therefore, from a technical point of view, everything is logical and expected. On Friday, as you might guess, there was not a single macroeconomic event either in America or in the European Union. The pair is already approaching price parity and everything is now moving towards the fact that this level will be surpassed, and the fall will continue well below the 1.0000 level. In principle, this picture may persist for several more months, as the Federal Reserve continues to raise rates, and the European Central Bank continues not to do so.
5M chart of the EUR/USD pair
The movements on the 5-minute timeframe are not the best at first glance, but in general, the pair moved only in one direction for most of the day, which is always good. First, the price bounced off the level of 1.0072, forming a false buy signal, after which it failed to move even 15 points in the right direction. This was followed by consolidating below the level of 1.0072 and, accordingly, a signal to sell, after which the quotes dropped to a high of 30 points. Naturally, the pair failed to reach the nearest target level of 1.0000, and the total volatility of the day barely exceeded 60 points, which is quite low. Novice players could earn about 25 points on the second deal, and it had to be closed manually in the late afternoon. Thus, there could not have been a loss on Friday, but it was hardly possible to make money either.
How to trade on Monday:
On the 30-minute timeframe, quotes can continue to fall for a long time. In any case, we now have a descending trend line, so it is much easier to navigate in space. We believe that most factors, fundamental and geopolitical, remain on the US dollar's side, so we expect its further growth in the medium term. On the 5-minute TF tomorrow it is recommended to trade at the levels of 0.9952, 1.0000, 1.0072, 1.0123, 1.0156. When passing 15 points in the right direction, you should set Stop Loss to breakeven. On Monday, according to tradition, no important statistics and "foundation" are planned either in the US or in the EU. Therefore, volatility may again be low, and the movement may not be the most trendy one.
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.
