Analysis of Friday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair continued to trade inside the 0.9900-1.0072 horizontal channel on Friday. As we expected, important macroeconomic statistics from across the ocean provoked serious movements in the market, but at the same time did not help the price leave the horizontal channel. Thus, the Nonfarm data is now left behind, and the pair remained inside the horizontal channel. In general, the NonFarm Payrolls report can be considered neutral. The number of new jobs created outside the agricultural sector amounted to 315,000, while the forecast was 300-310,000. That is almost an exact match, which is quite rare. Some may say that the significance of the report turned out to be weak, but on the contrary, we consider it to be very strong. Therefore, the dollar's growth after the release of this report raises no questions for us. Also take note that the unemployment rate rose to 3.7% in August, but this did not prevent traders from buying the dollar again. The unemployment rate is an important indicator, but it always comes out on the same day and at the same time as Nonfarm. Therefore, it is always in the shadow of a more important report. As a result, we continue to have a flat or "swing" around 20-year lows.
5M chart of the EUR/USD pair
The movements were not the best on the 5-minute timeframe on Friday. Prior to the release of US statistics, the pair gravitated towards growth, but it ended near the 1.0020-1.0034 area, from which three rebounds were made. These three bounces were the three sell signals that formed on the last trading day of the week. Let's break them down. The first signal should definitely be worked out. After its formation to the downside, more than 15 points were passed, but the target level was not reached. Therefore, the deal was closed by Stop Loss at breakeven. The second signal was formed exactly at the time of the release of the NonFarm Payrolls report, so it should have been skipped, because no one could predict in advance what the value of this indicator would be and what the market reaction would be. The last third signal was formed quite late, so novice traders could have missed it. However, if someone tried to work it out, they certainly made a good profit, since this was the best signal of the day. The price dropped to the target level of 0.9952.
How to trade on Monday:
The pair continues to trade inside the 0.9900-1.0072 horizontal channel on the 30-minute timeframe. Thus, until any of the channel boundaries is overcome, a flat can continue to be observed. It has always been very difficult to trade inside the flat, but good movements happen from time to time and good signals are formed. In any case, you should be cautious when trading inside the flat. On the 5-minute TF tomorrow it is recommended to trade at the levels of 0.9900-0.9910, 0.9952, 1.0020-1.0034, 1.0072. When passing 15 points in the right direction, you should set Stop Loss to breakeven. The final value of the index of business activity in the service sector for August and retail sales will be published in the European Union on Monday. These are far from the most important reports, so the reaction to them can be very weak. Meanwhile, nothing interesting is planned in the US on Monday.
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.
