Analysis of Monday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair was moving very badly on Monday. This happens on Mondays, when the market is just entering a new week, and there is little news and reports. However, today there were just a few reports that deserved attention. Indices of business activity in the services and manufacturing sectors of the European Union turned out to be worse than forecasts, worse than previous values. Thus, after their release in the morning, the euro fell. Similar business activity indices in the US also turned out to be weaker than forecasts and September values, therefore, they provoked the dollar's decline. However, even without these two reversals, the price has pulled back and corrected too often. There is no clear trend on the 30-minute timeframe right now. The pair settled below the ascending trend line, but did not continue its downward movement. It returned to the level of 0.9877, at which it stopped as part of an upward trend, and failed to overcome it twice. However, we warned in previous articles that the pair could move as inadequately as possible in the near future. It can be a "swing" or flat. In principle, now it is very difficult to say where the euro/dollar pair will move next.
5M chart of the EUR/USD pair
You can even better see on the 5-minute timeframe exactly how the pair was trading. First, all day long it ignored the level of 0.9845, which we removed at the end of the day. Secondly, it spent the whole day between the levels of 0.9807 and 0.9877, that is, in fact, a flat. And at the beginning of the European session, the price began to "dance" around the level of 0.9845, which is clearly seen in the chart below. Beginners could make a mistake and open more than one position on these signals, and receive a loss. It was small, but let us remind you once again: the price may move in an inadequate and ugly manner in the near future. The next buy signal near the level of 0.9807 could have been worked out, but the price on the way up ran into the level of 0.9845 and again began to "dance" around it. Therefore, a long position could be closed, but all subsequent signals around 0.9845 could no longer be processed. It was possible to try to work out the rebound from the level of 0.9877, but the pair failed to go even 15 points down, after which it returned to this level. This position could be closed manually at breakeven. Not the best day.
How to trade on Tuesday:
The pair continues to move with absolutely inadequate and unpredictable movements on the 30-minute timeframe. It is completely unclear whether it is going to continue moving up, or whether it will trade in a flat. There are still few reasons to expect a strong growth from the euro. For some time we can observe movements in different directions. On the 5-minute TF on Tuesday it is recommended to trade at the levels of 0.9636, 0.9709, 0.9756, 0.9807, 0.9877, 0.9952, 1.0020-1.0034. 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. Therefore, we may witness a flat, "swing" or any other similar movements. Be careful!
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 positions 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) Positions are opened in the time period between the beginning of the European session and until the middle of the US one, when all positions 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.
