Analysis of Friday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair continued its upward movement on Friday. Only one more or less significant report was published during the entire day - the consumer sentiment index from the University of Michigan. We don't usually wait for the market's reaction to this report, as it is rarely discouraging or shocking. However, this time the actual value differed quite strongly from the predicted value - 54.7 against 59.9. However, even in this state of affairs, we cannot conclude that it had a strong influence on the pair's movement. Since the index has fallen significantly, it was logical to expect the dollar to drop. And the greenback fell throughout Friday, it seems, continuing to work out the US inflation report, which was released on Thursday. Therefore, the dollar depreciated with this index, and without it. The ascending trend line is relevant, but the prospects for the euro still remain vague, from our point of view. However, at this time we have a clear trend and apparent buy signals. Therefore, fundamental assumptions are not yet confirmed by specific signals.
5M chart of the EUR/USD pair
You can even better see on the 5-minute timeframe that the price has risen by another 150 points almost out of the blue. We remain puzzled as to why the dollar has depreciated so much over the last two trading days. Yes, inflation has dropped quite a bit in the US, but this does not mean that now the Federal Reserve will stop raising the key rate. However, there are still certain reasons to expect the end of the long-term downward trend, it should be recognized. Let's deal with the trading signals that were not of the highest quality on Friday. The first buy signal near the 1.0221 level was quite inaccurate and could be interpreted in any way. It is now clear that the price has overcome this level, but at that time it could also be regarded as a sell signal. However, in this case, novice traders should have opened long positions, which should have already been closed around the level of 1.0269, from which two bounces followed. Both of these bounces should have been worked out with one short position, which turned out to be unprofitable, since the price did not go down even 15 points. The next buy signal near the 1.0269-1.0277 area turned out to be quite good, but Stop Loss worked on it, as the price quickly returned to the area. Only the last signal made it possible to make good money. As a result, it was possible to get about 50 points of profit per day.
How to trade on Monday:
The pair continues to steadily move up on the 30-minute timeframe. We have already said many times that the euro's growth is now very ambiguous and unreasonable, but at the same time there is this movement, and there is also an upward trend line. Therefore, an upward trend, whatever it is, is present and does not raise questions. On the 5-minute TF tomorrow it is recommended to trade at the levels 1.0123, 1.0156, 1.0221, 1.0269-1.0277, 1.0354, 1.0383, 1.0433, 1.0465, 1.0483, 1.0535. When passing 15 points in the right direction, you should set Stop Loss to breakeven. The European Union will publish a report on industrial production, which is unlikely to provoke a strong reaction. The news calendar is empty in the US.
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.
