Analyzing Wednesday's trades:
EUR/USD on 30M chart
EUR/USD continued to trade almost in a complete flat on Wednesday. Volatility was about 50 pips and most of the day the pair moved along 1.0736. No important reports during the day and no events either. Therefore, there is nothing much to analyze: no fundamentals, macroeconomics and movements. In our fundamental articles, we regularly analyze the long-term prospects of the pair and the higher charts. But now it is quite difficult to say how the pair will proceed because the market can't even start a bearish correction, though there are technical and macroeconomic reasons for that. However, the euro's growth cannot last forever, so even if the market is bullish, it is quite possible that the pair will fall. The situation is very confusing. There is no trend line because there are no reference points for its formation.
EUR/USD on M5 chart
Because the pair was moving sideways almost all day long, it was very difficult to count on strong or at least unreliable signals. Beginners (and not only them) were very lucky until the moment, because in most cases the flat formed few false signals, and losses could be easily avoided. But today the pair created signals near 1.0736 several times, but all of them turned out to be false, because none of the target levels worked out. Therefore, beginners could try to use only the first two signals. The pair was not able to go even 15 pips in the right direction in both cases, so there was a small loss in both trades. Be warned: the pair's movement is flat now so false signals are inevitable.
Trading tips on Thursday:
The pair started a new upward movement on the 30-minute chart, which is not logical and reasonable and could be part of a flat or "swing" on the higher chart. In addition, in the last few days, even the movement on the 30-minute chart was flat. I still believe that the euro should fall significantly, but the market shows that it is not ready to sell and uses any chance to buy the euro. In between they enjoy a flat. 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 and 1.0905. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. There are no important events scheduled for Thursday in the European Union, but an important inflation report will be published in the US, which could move the pair. It is hard for us to expect a logical market reaction to this report, but there is hope...
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.
