Analyzing Monday trades:
EUR/USD on 30M chart
EUR/USD was trading within a strong trend on Monday and broke above the ascending trendline by the end of the session. In the previous week, I mentioned several times that a strong downward correction was about to start. It seems that the correction has already begun. Traders now have a clear technical signal, so the trend has already reversed to the downside and is likely to continue further. There were no important economic events on Monday either in the US or in the EU. Therefore, a drop in the European currency cannot be attributed to any macroeconomic or fundamental background. In the course of the week, there will be only a few significant reports which is actually good for the pair as it won't be affected by any external factors. I expect the US dollar to recover because its latest round decline that has been observed for the past three weeks is ungrounded and not logical.
EUR/USD on M5 chart
The trend movement could be well observed on the 5-minute chart. The only problem was that most of it happened in the Asian session, that is, in the early hours when we do not recommend trading. So, by the moment the first and only trading signal was formed near the area of 1.0269 -1.0277, the price had already gone far to the downside. Still, traders could have made profit even from this signal. The pair broke above the mentioned range and almost reached the key level of 1.0221. It missed some 5-6 points to reach this mark which is quite a lot for the euro/dollar pair. Therefore, the trade should have been closed manually although this moment could be hard to spot. If beginners failed to do this, that's ok. Anyway, the price couldn't make it to 1.0269 before evening. So, this position could be closed with a profit in any case.
Trading tips on Tuesday:
The uptrend has been canceled on the 30-minute time frame, just as we predicted a week ago. It's better late than never. This week, the pair may extend its decline even though there will be no macroeconomic or fundamental background. On the 5-minute chart on Tuesday, it is recommended to trade at the levels of 1.0093, 1.0123, 1.0156, 1.0221, 1.0269-1.0277, 1.0354, 1.0391, and 1.0433. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. No important fundamental events are expected on Tuesday either in the US or in the EU. Yet, we still observed the formation of a new trend, and the pair is passing 100 pips every day. The pair opened the session with no signs of a flat movement which means that we may hope for a proper trend throughout the week.
Basic rules of the trading system
1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
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 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, and 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 patterns (channels and trendlines).
Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.
