Analysis of Friday's deals:
30M chart of the EUR/USD pair
The EUR/USD currency pair was trading in a nondescript manner on Friday, as well as during the entire week. You can clearly see on the chart that the pair was between 1.0269 and 1.0465. On some days there was an outright flat. Generally speaking, this week the pair's movement cannot be called a flat, but its pattern looks more like a flat than a trend. Friday was dominated by the slight downward trend, but the upward trend line is still relevant, which means that the upward trend persists. Unfortunately, if the sideways movement persists, the price can easily overcome the trend line, but it will not mean the start of a new downward trend. There were few important fundamental events this week and were mostly ignored. There was absolutely nothing of interest in the US, and in the EU there was a speech from European Central Bank President Christine Lagarde, who said that rates will continue to rise to levels that will limit economic growth. This is necessary in order to continue putting pressure on high and rising inflation. However, Lagarde did not say anything new, and the market did not react to her speech in any way.
5M chart of the EUR/USD pair
You can see even better on the 5-minute chart that the pair was in a blatant flat for most of the day, between the levels 1.0354 and 1.0391. Seven trading signals were only produced in this range during the European session and at the beginning of the US one. Of course, it is not recommended to trade in the flat, but it is not always possible to promptly detect the start of the flat. Therefore, novice traders could try to work out some signals. It is interesting that almost none of the first seven signals were outright false, because the price reached the levels mentioned above more or less accurately and almost every time reached the nearest target level. That is why one could gain 5-10 points on almost any deal. It was not possible to earn on the signal when the pair would settle below 1.0354, but there was no loss either, since the pair passed the 15 points that was necessary to set Stop Loss for breakeven. As a result, it was possible to achieve a small profit by "pipsing".
How to trade on Monday:
The pair maintains an uptrend on the 30-minute chart and is quite far from the trend line. We still expect a serious correction, but it will be possible to speak about a downtrend when the price overcomes the uptrend line. Tomorrow, we advise you to trade at 1.0123, 1.0156, 1.0221, 1.0269-1.0277, 1.0354, 1.0391, 1.0433, 1.0465, 1.0483 on the 5-minute chart. If the price passes 15 pips in the right direction, Stop Loss should be set to breakeven. There are no important events, neither macroeconomic nor fundamental, scheduled for Monday in the European Union and the US. Recently the pair has been trading mainly sideways and volatility has decreased. A similar movement may be observed tomorrow.
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.
