Analyzing Monday's trades:
EUR/USD on 30M chart
EUR/USD continued Friday's movement by moving upward. Take note that the movement was a consequence of Friday's macro data. The European inflation report was published on Friday, and traders were not interested in it, as well as at least three important reports in the US, including NonFarm Payrolls, unemployment and the ISM services industry activity. Naturally, the market primarily focused on the Nonfarm data, however, as it turned out a little later, the ISM report that fell triggered the dollar's collapse. The index managed to fall below the "waterline" of 50.0 from 56.5 the previous month. And Nonfarm was the only data that was at a decent level - 223,000. In addition, the unemployment rate fell again to 3.5%, so the only report that could have provoked the dollar's fall was the ISM. Nonfarm, on the other hand, can be considered "neutral", and the market simply ignored the unemployment rate. And so once again we witnessed the euro rise for no logical reason, because one ISM index obviously cannot be the reason why the dollar fell for two days when there's good data on the labor market and excellent unemployment.
EUR/USD on M5 chart
There were several trading signals, but most of them were in the area of 1.0668-1.0697, that is, in the flat, which was observed most of the day. Thus, in the morning, novice traders could trade for a rebound from these levels. However, it was only possible to earn a maximum of 5 points for any of the open positions. The pair only started a confident upward movement during the final rebound from 1.0668, and the signal should be worked out with a long position. By the end of the day, the price was above 1.0736, and there were no more sell signals. Therefore, the position should have been closed manually in profit of about 75 points, which is an excellent result.
Trading tips on Tuesday:
The pair started a new upward movement on the 30-minute chart, which is not logical and reasonable. And it is even more unclear why it continued. We are still in favor of the fact that the euro should fall and quite sharply at that, but the market once again shows that it is not ready for short positions yet and it uses any reason to buy the euro. On the 5-minute chart, it is recommended to trade at the levels 1.0536, 1.0587-1.0607, 1.0657-1.0668, 1.0697, 1.0736, 1.0787-1.0806, 1.0837, 1.0905. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. On Tuesday, no important events are planned in the European Union, and the US will host a speech by Federal Reserve Chairman Jerome Powell, which may turn out to be interesting, and the market reaction may be quite strong.
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.
