Analyzing Friday trades:
EUR/USD on 30M chart
EUR/USD continued the sideways movement on Friday, which you might have already gotten used to. The volatility of the day was about 40 pips and there was no macro data that could push traders to be more active. Take note that at the same time, GBP/USD has a trend, so the flat is not affecting the whole market, but only the EUR/USD pair. It is very uncomfortable to trade at the moment, which is obvious. Among Friday's macro data, we can single out the report on the US Durable Goods Orders. Its results sharply deviated from the forecasts. Orders were down 2.1% in November, while traders expected a decline of no more than 0.5-0.6%. However the US dollar did not react to this report or any other less important data. I don't expect the flat to end next week, but if it does happen, there will be clear signals.
EUR/USD on M5 chart
Speaking of trading signals, traders were lucky again. All the signals were around 1.0587-1.0607, all of them were false, but all of them were the buy signals. Therefore, there were no counter-trend signals during the day, so beginners did not have to close longs in losses to open shorts and vice versa. The price either went up 15 pips and the Stop Loss triggered at breakeven, or it did not, and a long should have been opened until the pair crossed 15 pips. In general, there could be no loss, but there was no profit to be made either.
Trading tips on Monday:
EUR/USD is still in the 1.0587-1.0657 horizontal channel on the 30-minute chart. Thus, in order to count on any kind of trend movement, the pair should leave this range. The direction of the movement will be determined by which limit the pair will cross. So far, it has more chances to cross the lower limit. On the 5-minute chart, it is recommended to trade at the levels of 1.0465-1.0483, 1.0536, 1.0587-1.0607, 1.0657-1.0663, 1.0697, 1.0736, 1.0787, 1.0806. 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 I do not expect strong movements, or the flat to end.
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.
