Analyzing Wednesday's trades:
EUR/USD on 30M chart
EUR/USD continued its upward movement on Wednesday, which was already expected after the pair left the descending channel. We had a technical buy signal, but there was also a fundamental background that supported the euro. In particular, this was the German inflation report. We usually do not pay attention to the German reports since it is just one country in the European Union. However, we should admit that sometimes these reports are followed by a market reaction. But we're also not sure if traders reacted exactly to the inflation report. The Consumer Price Index remained unchanged in February, but the market expected at least a slight slowdown. In fact, the lack of a slowdown in inflation in the largest EU economy means that the European Central Bank can raise its key rate longer and harder. And this factor supports the euro. Therefore, the pair has risen to 1.0669 and it may continue rising for some time. I still believe that the euro's fall is more justified. But it can't continue to fall without corrections.
EUR/USD on 5M chart
There were few trading signals on Tuesday. Beginners were lucky that the pair showed a very good trend for most of the day. The first buy signal was formed early in the morning, when the price overcame the area of 1.0587-1.0607. After that it managed to rise to 1.0669 and surpassed it as well. But it couldn't reach the target level of 1.0697 and dropped below 1.0669 during the US session. Exactly at that moment, the long position, opened using the morning signal, should be closed. The profit on it was about 45 pips. Also, beginners could have opened a short position upon the sell signal around 1.0669, but the quotes did not fall as much. The price returned to the point of formation almost immediately, but in the meantime, it managed to go down 15 points, which was enough for the Stop Loss to be set to Breakeven. That's why there was no loss on the second position. Further, beginners could calmly leave the market, remaining in a good profit.
Trading tips on Thursday:
On the 30-minute chart, the pair has left the descending channel, which greatly improves its growth prospects. Thus, we can observe the upward movement for a few more days, especially now that the macroeconomic background is on the side of this movement. But in the next few weeks, we might see the beginning of a new powerful decline. On the 5-minute chart, it is recommended to trade at the levels 1.0433, 1.0465-1.0483, 1.0535, 1.0587-1.0607, 1.0669, 1.0697, 1.0792, 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 Thursday, the key report of the day will be the EU CPI for February. The market expects a decline to 8.2-8.4%, but might not, as inflation was rising rather than falling in some EU countries in January and February. Unsatisfactory inflation may help the euro continue to rise.
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.
