Analysis of Wednesday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair easily and naturally continued its upward movement on Wednesday. At this time, it seems that the dollar and the euro have swapped places, since earlier it was the dollar that was growing almost non-stop for a long time. But times are changing and now the euro has taken the initiative into its own hands, which raises many questions. The key question is – why did the market suddenly start buying the euro, if the fundamental and geopolitical backgrounds have not changed at all lately? Moreover, neither yesterday nor today there were no important macroeconomic statistics either in the US or in the European Union. It turns out that the pair is growing for no apparent reason! And we think that this is not the best sign for it. On the one hand, the market shows that it is ready to buy even without any reason. On the other hand, it can be accelerated before a new, powerful fall. Recall that the European Central Bank will sum up the results of its meeting and will probably raise the rate by 0.75%. Maybe now the market has already won back this result, which has not yet been announced? Then on Thursday we can see the euro fall, despite the hawkish decision on the rate... One way or another, while the euro is growing and a new ascending trend line is formed.
5M chart of the EUR/USD pair
In regards to Wednesday's trading signals on the 5-minute timeframe, the situation was very, very good. The first buy signal was formed at the beginning of the European trading session, when the price rebounded from the level of 0.9952. Subsequently, the euro rose and overcame the area of 1.0020-1.0034, but a little later it consolidated below it, which could be interpreted as a signal to sell and close long positions. Profit amounted to 45 points. The sell signal should also have been worked out, but it turned out to be false, and the price again settled above the level of 1.0034. Loss - 32 points. A new breakthrough of the 1.0020-1.0034 area should have been worked out with a new long position, which also turned out to be profitable, as the pair rose to the next target level of 1.0072 and could not continue to grow or rebound further. Profit - another 30 points. Thus, the day ended in profit for novice traders anyway.
How to trade on Thursday:
The pair formed a new upward trend on the 30-minute timeframe, which looks quite surprising, given the complete absence of support factors for the euro. We are anxiously awaiting the announcement of the results of the ECB meeting, as the market could work them out in advance. Therefore, the euro may show a fall due to a rate hike... On the 5-minute TF on Thursday, it is recommended to trade at the levels of 0.9807, 0.9877, 0.9952, 1.0020-1.0034, 1.0072, 1.0123, 1.0156, 1.0221. When passing 15 points in the right direction, you should set Stop Loss to breakeven. The European Union will announce the results of the central bank meeting, as well as a speech by ECB President Christine Lagarde. Both of these events are very important for the foreign exchange market. However, there will be something to pay attention to in America as well. If the Durable Goods Orders report is not the most important, then the GDP report can affect the mood of traders.
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) Trade 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.
