Analyzing Friday's trades:
EUR/USD on 30M chart
EUR/USD continued to make unpredictable and erratic movements throughout Friday. Part of this can be attributed to the semi-holiday status, but at the same time, important macro data were scheduled to be released in the US on that day, which traders could hardly miss. Generally, it was clear from the beginning that the pair would move in an unknown direction. In the past few weeks, it has been difficult to find any logic in the currency market. The euro has been rising in most cases, but it is difficult to explain why. The pair entered a bearish correction for the last three days, but now some are wondering if the uptrend is over? Friday's labor market and unemployment data were quite good, but traders only responded with a 40-point rise of the dollar, which was completely offset in just a few hours. So in fact, there was practically no reaction to the data.
EUR/USD on 5M chart
It is even better to see how the pair moved on the 5-minute chart. It stood in the same place during the European trading session, and plummeted at the beginning of the US one. But the word "collapse" is not entirely applicable here, since the movement was 40 pips, and the total volatility of the day was 50 pips. Therefore, even taking into account the movement after the data was released, volatility was very low. Beginners could have worked out only the sell signal, which was forming all morning. But, most likely, this was not possible either, because it was formed when the nonfarm report was published in the US. Consequently, there was no opportunity to react to it. As a result, positions shouldn't have been opened on Friday.
Trading tips on Monday:
On the 30-minute chart, the pair has settled below the new uptrend line, which implies a downtrend. But in reality the pair is neither falling or rising. The movements are quite unusual and illogical. Macro data has almost no effect on the pair's movement. The situation is still unfavorable for trading. On the 5-minute chart, it is recommended to trade at the levels 1.0692, 1.0737, 1.0792, 1.0857-1.0867, 1.0920-1.0933, 1.0966, 1.0989, 1.1038, 1.1070, 1.1132. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. No important events or reports planned in either the US or the EU. Thus, volatility may remain low and the nature of the pair's movement is uncertain.
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.
