Analysis of Friday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair continued its downward movement on Friday, but this time it already had specific macroeconomic reasons for this, unlike the last two days, when the fall was influenced by the technical factor of the need to correct. The most important reports of the week were published in the US on Friday - on NonFarm and unemployment. Everyone was waiting for an "interesting" value from the NonFarm Payrolls report, but it turned out that unemployment surprised and impressed. Recall that last month, unemployment in the US rose by 0.2%, and many experts immediately began to sound the alarm, as the rise in unemployment potentially means that the US economy is entering a recession that is no longer "technical". However, a new report showed that unemployment fell again and amounted to 3.5% in September. It was this report that could provoke a new growth of the dollar. NonFarm, on the other hand, showed the creation of 260,000 new jobs outside the agricultural sector, which, in principle, was in line with forecasts. But in general, this value can also be considered quite strong. It is noteworthy that the pair's volatility decreased on Friday, and the dollar rose in price by only 50 points. But a new trend line has been formed, which now supports the bears.
5M chart of the EUR/USD pair
Only one signal was formed on the 5-minute timeframe on Friday. After the release of the US statistics, the euro fell to the area of 0.9748-0.9753 and rebounded from it very inaccurately. This buy signal should have been ignored, since it was formed just at the time when important reports were released, which means that the movements could be in any direction. If a strong signal had been formed, then one could still try to work it out with the obligatory setting of Stop Loss. But there was no strong signal, so novice traders should not have gone long.
How to trade on Monday:
The pair left the ascending channel on the 30-minute timeframe and at the moment a new descending trend line has already been formed, which signals a possible continuation of the fall. Naturally, the pair may consolidate above it on Monday, but so far everything is going to resume the long-term fall of the pair. The 0.9554 level is the pair's low over the last 20 years, and we can see how close the price is from this level. That is, in fact, the euro once again failed to show either a strong correction or start an upward trend. On the 5-minute TF tomorrow it is recommended to trade at the levels of 0.9554, 0.9636, 0.9636, 0.9748-0.9753, 0.9845, 0.9877, 0.9952. When passing 15 points in the right direction, you should set Stop Loss to breakeven. Neither the European Union nor the United States will release an important report on Monday. Thus, there will be nothing for the market to react to, and we can observe a "boring 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.
