Analyzing Monday's trades:
EUR/USD on 30M chart
On Monday, EUR/USD slightly corrected, failing to overcome 1.0669 for the second time. So far, it has stopped falling, but there will be many important reports this week, so surely the most interesting moves are still to come. Monday was quite boring without any important reports or events. On the 30-minute chart, we still have no trend line or channel, nevertheless, the downtrend is still there. I believe that the pair will cross 1.0669 sooner or later, and the euro will continue to fall, because the descending movement, which was shown during the last week and a half, is too weak to be considered as a full correction against the preceding uptrend. The euro has been rising too much and for too long, with no good reason and no basis for such growth.
EUR/USD on M5 chart
Since the pair spent most of the day in sideways movement, there were almost no signals. The pair nearly spent the entire day between 1.0669 and 1.0697, so the first and only signal was formed when the price was above that area. Beginners could even try to take this buy signal and gain about 10 pips in it, closing the deal manually closer to the evening. With a total daily volatility of about 70 points and a flat, this is not so bad.
Trading tips on Tuesday:
On the 30-minute chart, the pair quickly completed the bullish correction and returned to 1.0669. But it could not cross this level, so we have to wait for stronger fundamental and macroeconomic background. I expect the pair to fall. On the 5-minute chart, it is recommended to trade at the levels 1.0535, 1.0587-1.0607, 1.0669, 1.0697, 1.0761, 1.0809, 1.0857-1.0867. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. On Tuesday, the EU will release its fourth quarter GDP report. It will be the second estimate, so it is unlikely to surprise or impress the market participants. Hence, we do not expect any strong reaction to it. The US inflation report for January will be released. Over the last half a year, this has been the most important event for the currency market, so we expect a strong reaction and sharp movements, which might help the dollar to continue its strengthening against the euro.
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.
