Analysis of Tuesday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair continued to trade in absolute flat on Tuesday. As part of this flat movement, it even managed to overcome the descending trend line, however, we remember that the signals formed in the flat are not strong. Therefore, the pair is free to continue its fall on Wednesday or Thursday. Moreover, an important report on US inflation will be released on Thursday, which will surely move the pair off the dead center. There were no important events on Tuesday. Therefore, traders had nothing to react to, and the volatility equal to 66 points is quite understandable. At the same time, the euro/dollar continues to remain in close proximity to its 20-year lows. Therefore, we are more inclined to believe that the downward movement will continue than a new round of growth will begin. The euro is still experiencing big problems due to the complex geopolitical background and complex "foundation".
5M chart of the EUR/USD pair
No trading signals were formed on the 5-minute timeframe on Tuesday, because the pair never approached any of the levels all day. In principle, we believe that this is good, since a blatant flat was observed all day and the signals could be false. Therefore, novice players should not have entered the market. In general, they should expect a more favorable situation for entering the market than an absolute flat.
How to trade on Wednesday:
The pair continues its downward movement on the 30-minute timeframe, although it left the area below the trend line. However, this week we see only a flat, so it is inconvenient to trade now, and there is practically no signal. We believe that the pair may continue to move lower and renew its 20-year lows in the near future. The euro once again shows its unpreparedness for serious growth. On the 5-minute TF on Wednesday it is recommended to trade at the levels of 0.9554, 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. The European Union will publish only industrial production for August, and in the evening there will be a speech by European Central Bank President Christine Lagarde. Naturally, Lagarde's speech is much more important, but it will take place in the evening, when the newcomers will already have to leave the market. There is absolutely nothing interesting in America.
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.
