Analyzing Friday trades:
EUR/USD on 30M chart
EUR/USD showed turbulent movements on Friday, but in general volatility was very low, and there was practically no fundamental and macroeconomic background. At the moment, there is no trend line and trend channel, and the movement is nearly sideways. On Friday, the pair passed about 80 points from the low to the high of the day, which doesn't seem too small, but isn't really much either. In general, last week's situation was quite inconvenient for traders. Also, just the fact that there were nearly no reports and important events, traders were forced to work out even the secondary data, which they usually just ignored. For instance, they used the producer price index, which is a fairly formal indicator, since the consumer price index is much more important.
EUR/USD on M5 chart
As for Friday's trading signals, the situation was quite vague. First, the pair rebounded twice from 1.0582, i.e. it formed two sell signals. Only one of them should have been used, as they simply duplicated each other. Consequently, the price fell to the nearest target level of 1.0535, near which the "dancing and singing" started. We are not removing this level from the charts yet, as last week turned out to be very confusing. Nevertheless, it was possible to get a small profit on a short position. However, beginners could also open one long position near 1.0535, which almost certainly closed at a loss. Thus, 25 pips were gained on the first trade, which were most likely offset by the loss on the second trade.
Trading tips on Monday:
The uptrend has been canceled on the 30-minute time frame, and the price is actually moving sideways. There was no trend in the past few days. Next week the situation may change since there will be a lot of important events and reports. We still expect a strong downward movement, but next week everything will depend on the fundamental background. On the 5-minute chart tomorrow, it is recommended to trade at the levels of 1.0354, 1.0391, 1.0433, 1.0465-1.0483, 1.0535, 1.0582-1.0607, 1.0636, 1.0663, 1.0697. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. There are no important reports or events scheduled for Monday in the EU or the US, so there will be nothing to react to...
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.
